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DTCC Releases 2012 Annuity Product Activity Showing Decline in Net Cash Flows from 2011

The Depository Trust & Clearing Corporation (DTCC) Insurance & Retirement Services (I&RS) released findings on activity and trends in the market for annuity products in 2012. The report is based on data, obtained from the millions of transactions processed by and entrusted to I&RS, which is available through its online Analytic Reporting for Annuities information service.

In 2012, I&RS processed more than 48 million transactions accounting for approximately $158 billion in annuity cash flows. The number of transactions was up 7.5% from 2011 and total cash flows increased by 1%.

The annuity transactions were processed for:

  • 112 insurance company participants
  • 116 broker/dealers
  • 3,418 annuity products

Transactions processed by I&RS provide a view of a broad range of insurance companies and broker/dealers, with a particular concentration on non‐proprietary distribution.

Comparisons to prior periods

During 2012, inflows declined by $5.6 billion, or more than 6%, to $84.7 billion, from $90.3 billion in 2011. Out flows increased by $7.2 billion, or almost 11% in 2012, to $73.5 billion, from $66.3 billion in 2011. The decline in inflows and the increase in out flows resulted in a decrease of net cash flows to $11.3 billion from $24 billion in 2011.

The following table shows changes in inflows in some of the largest product types from 2011 to 2012.

      2011 Inflows $B   2012 Inflows $B   % Change
Variable Annuity 63.8 63.8 0.1%
Fixed Annuity 11.3 7.5 -33.4%
Group Annuity 5.5 4.6 -15.6%
Variable & Fixed Annuity 6.6 4.3 -35.7%
Fixed Immediate Annuity 1.3 2.4 82.2%

Transactions showed more than 50% of all annuity inflows went into IRA accounts, with 41% going into non-qualified accounts.

A comparison of fourth quarter cash flows shows that inflows declined by $1.8 billion in 2012 from 2011, but 2012 inflows were higher than in 2010. A large increase in out flows in Q42012 resulted in a decline in net cash flows to $410 million.

      Q4 2010 ($B)   Q4 2011 ($B)   Q4 2012 ($B)
Inflows 19.7 21.9 20.1
Out flows -14.9 -15.9 -19.7
Net flows 4.9 6.0 0.4

Comparing the third quarter and fourth quarters of 2012 shows a similar decline in inflows and increase in out flows, resulting in a 90% decline in net cash flows.

      Q3 2012 ($B)   Q4 2012 ($B)
Inflows 21.8 20.1
Out flows -17.7 -19.7
Net flows 4.1 0.4

During December, inflows increased by 3.5%, falling just short of $6.6 billion, from $6.4 billion in November. Out flows increased more than 7% to $6.7 billion, from $6.3 billion. Net cash flows declined $86 million in November to negative $140 million in December.

About Analytic Reporting

Analytic Reporting for Annuities is an online information solution containing aggregated data from transactions processed by DTCC's Insurance & Retirement Services (I&RS). I&RS is the central messaging connection for annuity and life insurance transactions, enabling insurance companies to provide broker/dealers with daily financial transaction information. It processes approximately 150 million transactions each month.

Because Analytic Reporting is based on processed transactions, not surveyed data, Analytic Reporting gives DTCC customers a unique and unprecedented view of their own business as well as the market for annuity products so that they can discover key trends and identify opportunities. With updates approximately two to three weeks after each month-end, Analytic Reporting allows users to assess their business and access industry intelligence to support management decisions about sales, sales management, marketing and product offerings. Analytic Reporting is a hosted turnkey solution, available online anywhere, anytime. DTCC customers don't have to store or manage the data. They don't have to develop applications or run SQL queries to obtain the business information they rely on for decision making.

Visit http://www.dtcc.com/analytics for more information about the Analytic Reporting Service.

About DTCC

The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC, through its subsidiary National Securities Clearing Corporation (NSCC), is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC's depository provides custody and asset servicing for 3.6 million securities issues from the United States and 121 other countries and territories, valued at almost $34 trillion. In 2010, DTCC settled more than $1.66 quadrillion in securities transactions. Insurance & Retirement Services (I&RS) is the DTCC division that processes annuity and insurance transactions. I&RS is the central messaging connection for annuity and life insurance transactions, enabling insurance companies to provide broker/dealers with daily financial transaction information. It processes approximately 150 million transactions each month.

The Analytic Reporting Service is a service offering of National Securities Clearing Corporation ("NSCC"), a clearing agency registered with the U.S. Securities and Exchange Commission and wholly-owned subsidiary of DTCC.

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