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The Depository Trust & Clearing Corporation (DTCC) Insurance & Retirement Services (I&RS) released today January information on activity in the market for annuity products from its award-winning Analytic Reporting for Annuities online information service, which leverages data from the transactions that DTCC processes for the industry. Analytic Reporting for Annuities is a service offering of National Securities Clearing Corporation, a DTCC subsidiary.
The charts for this release can be viewed at:http://www.dtcc.com/news/press/releases/2012/jan.pdf.
- Annuity inflows processed by DTCC in January declined over 20%, to $6.2 billion from $7.8 billion in December
- Out flows processed in January declined almost 8% to $5.5 billion from $5.9 billion in December
- The top 10 insurance companies accounted for 66% of all inflows processed in January
- The top 10 annuity products accounted for 36% of all inflows processed in January
- Five hundred thirty eight (538) annuity products saw positive net flows in January, while 2,256 annuity products saw negative net flows, where the amount redeemed exceeded the amount invested
Annuity activity has been trending down over the past 13 months, as reflected in the following chart.
The increasing divergence of inflows between IRA accounts and non-qualified accounts seen in 2011 narrowed in January due primarily to a drop in inflows in IRA accounts. Inflows to 401k accounts increased by 91% in December and still remained higher in January than in any other month since January 2011.
Although non-qualified accounts attracted 39% of inflows in January, for the first time since July 2011 the net cash flows into non-qualified accounts were negative, meaning that more funds were withdrawn than added. “Non-qualified accounts garnered only 6% of net cash flows in 2011, and this drop into negative net flows in January is another display of the greater persistence, or stickiness, of investments into qualified plan accounts compared to non-qualified accounts,” said Andrew Blumberg, who is leading the Analytic Reporting initiative for DTCC. In 2011 regular IRA accounts took the lion’s share of net flows with 77% and 401k plans attracted 13% of net flows.
DTCC-RIIA Agreement
In August 2011, DTCC joined forces with the Retirement Income Industry Association (RIIA) to analyze cash flows by RIIA-defined broker/dealer distribution channels and product categories. For the six distribution channels defined by RIIA, the following are the percentages of inflows processed by DTCC I&RS in January:
- Independent broker/dealers – 27%
- Wirehouses – 19%
- Regional broker/dealers – 14%
- Bank broker/dealers – 13%
- Insurance broker/dealers – 10%
- Others – 17%
