Morningstar Advisor - Spring 2008 - 92

By the Numbers: VAs VA Sales Up, but Uncertainty Looms New sales of variable annuities totaled $178.8 billion in 2007, a 15.5% increase over $154.8 billion of new sales in 2006. On a quarterly basis, new sales of $46.7 billion represented a 3.3% increase over third-quarter 2007 new sales, which totaled $45.2 billion, and a 17.6% increase over fourth-quarter 2006 new sales, which were $39.7 billion. Assets under management dropped slightly in the fourth quarter to $1,485.2 billion, a 1.2% decline from third-quarter assets of $1,503.4 billion. Assets increased from $1,376.4 billion in the fourth quarter of 2006, a 7.9% increase year over year. Net flow declined in the fourth quarter, to $9 billion from $9.4 billion in the third quarter of 2007, a 4.3% drop. On an annual basis, however, net cash flow of $34 billion in 2007 showed solid improvement, increasing by 14.5% over 2006 total net cash flow of $29.7 billion. Sales and assets under management in VAs have been growing since hitting a low point in 2002. Assets of $1,485.2 billion as of Dec. 31, 2007, were 91.4% higher than the nadir of $776 billion on Dec. 31, 2002. Market and economic turmoil, uncertainty, and the requirements of FINRA 2821 all suggest a dark cloud for VAs in 2008. But 2008 might also be the acid test for the VA message. Historically, fixed annuity sales have risen and VA sales have dropped during periods of declining equities markets and uncertain economic outlook. This “flight to certainty” could transform into a “flight to guarantees,” allowing nervous investors to “buy low” with peace of mind. Correction Sales Rank Contract Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 RiverSource Life Insurance Company RVS RAVA4 Advantage Jackson Natl Life Insurance Co Perspective II John Hancock Life Insurance Co (USA) Venture III Pacific Life Insurance Company Pacific Innovations Select Metropolitan Life Insurance Preference Plus Select American Skandia Life Assurance Co XTra Credit Six Hartford Life Insurance Company Leaders 3 John Hancock Life Insurance Co (USA) Venture (2006) Pacific Life Insurance Company Pacific Value Hartford Life Insurance Company Leaders Outlook 3 ING USA Annuity and Life Insurance Co GoldenSelect Landmark American Skandia Life Assurance Co APEX II Hartford Life Insurance Company Director M Jackson Natl Life Insurance Co Perspective L Series Lincoln National Life Insurance Company American Legacy III View ING USA Annuity and Life Insurance Co GoldenSelect ES II AXA Equitable Life Insurance Co Accumulator Elite 2007 MetLife Investors USA Insurance Company MetLife Investors Series XC VA ING USA Annuity and Life Insurance Co GoldenSelect PREMIUM PLUS Lincoln National Life Insurance Company ChoicePlus Assur. (L Share) AXA Equitable Life Insurance Co Accumulator Elite 2006 Fidelity Investments Life Ins Personal Retirement Lincoln National Life Insurance Company American Legacy III AXA Equitable Life Insurance Co Accumulator 2007 RiverSource Life Insurance Company RVS RAVA4 Select Lincoln National Life Insurance Company Am. Leg. Shareholder's Advan. Pacific Life Insurance Company Pacific Voyages AXA Equitable Life Insurance Co Accumulator Plus 2007 AXA Equitable Life Insurance Co Accumulator 2006 AXA Equitable Life Insurance Co Accumulator Plus 2006 Sun Life Assurance Co of Canada (US) Masters Flex John Hancock Life Insurance Co (USA) Venture Vantage Hartford Life Insurance Company Director M Outlook MetLife Investors USA Insurance Company MetLife Investors Series L-4 Year Ohio National Life Insurance Co. ONcore Lite New England Life Insurance Co American Forerunner Series Thrivent Financial For Lutherans Thrivent - Flexible Prem. DVA (New) Genworth Life and Annuity Insurance Co. RetireReady Choice AIG SunAmerica Life Assurance Company Polaris II A-Class Platinum Series Nationwide Life Insurance Co BOA - All American Gold Lincoln National Life Insurance Company ChoicePlus Assur. (B Share) Nationwide Life Insurance Co BOA - America's Future II Pruco Life Insurance Premier VA X Series Hartford Life Insurance Company Leaders Plus 3 American Skandia Life Assurance Co Advisors Plan III AIG SunAmerica Life Assurance Company Polaris Choice III Lincoln National Life Insurance Company ChoicePlus Assur. (Bonus) Massachusetts Mutual Life Insurance Transitions Select Hartford Life Insurance Company Leaders Edge 3 AIG SunAmerica Life Assurance Company Polaris Platinum II In the Winter 2008 issue’s VA table, the Annual Contract Charges column incorrectly displayed average subaccount expenses. The error has been corrected. Frank O’Connor is manager of Morningstar’s variable annuity software applications. 92 Morningstar Advisor Spring 2008 Data as of December 31, 2007 GMWB Guaranteed Minimum Withdrawal Benefit GMIB Guaranteed Minimum Income Benefit

Morningstar Advisor - Spring 2008

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