Reston, VA, December 15, 2008 - NAVA, the Association for Insured Retirement Solutions®, today announced third quarter results for the variable annuity industry.  The combined net assets of U.S. variable annuities decreased 7.9% to $1.3 trillion at the end of the third quarter, as compared with the end of the second quarter of 2008.  Net assets decreased by 13.2% relative to the third quarter one year ago.

Table 1. Variable Annuity Net Assets

^{Source: Morningstar, Inc.}

Variable annuity total sales, also known as premium flows, for the third quarter was $37.8 billion, an 18.1% decrease from the third quarter of 2007.  Third quarter net sales, also known as net flows of $4.9 billion, showed a decrease of 47.3% from third quarter 2007 net sales of $9.4 billion.  The mix in premiums for the third quarter showed that 66% of the total sales were in qualified plans and 34% in non-qualified plans.

Total sales for the first nine months of 2008 were $121.4 billion, a 9.6% decrease from the prior year's nine-month sales of $134.4 billion.  Cumulative net sales for the first nine months of 2008 were $19.7 billion, or 16.2% of total flows. This reflects a 19.6% decrease in cumulative net flows as compared with the first nine months of last year.

Table 2. Variable Annuity Premium Sales¹

^{Source: Morningstar, Inc.}

Table 3. Quarterly Variable Annuity Total Sales & Net Sales

Quarter Ended

^{Source: Morningstar, Inc.}

The mix of net assets by investment objective showed that $662.9 billion, or 51.2% of total $1,295.3 billion total assets, was held in equity accounts.  This is a decrease of 26.9% as compared with the third quarter of 2007 when $907.4 billion, or 60.8%, were held in equity accounts.  The mix also shows that $289.1 billion, or 22.3% of assets, were held in fixed accounts.

Table 4. Variable Annuity Assets by Asset Class

(As a percent of total assets)                           9/30/08               9/30/07

Equity                                                               51.2%                 60.8%

Fixed Accounts                                                22.3%                 17.1%

Balanced                                                           12.5%                 11.3%

Bonds                                                               10.1%                   8.2%

Money Market                                                    3.9%                   2.6%

^{Source: Morningstar, Inc.}

About Annuities - With the demographic trend of people living longer, the decline in traditional sources of retirement income (pensions and Social Security), and the responsibility of retirement funding shifting to the individual - an annuity is a critical component of a retirement plan.  It is a long-term retirement investment vehicle offering a combination of insurance benefits, guaranteed lifetime income payments and tax-deferred savings.  Variable annuities allow individuals to invest in a variety of underlying fixed and equity funds, and provide returns based on the performance of these funds.  Only annuities protect retirement assets against market volatility and guarantee retirement income that cannot be outlived.

About NAVA, Inc. - NAVA, the Association for Insured Retirement Solutions®, is a non-profit trade association located in suburban Washington, D.C.  NAVA provides a variety of services to the industry including educational forums, research and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance.

1 - Total Premium Sales (also called total premium flows) represent the sum of new sales (all first-time buyers of a contract, including inter- and intra-company exchanges) and additional premiums from existing contract owners.  Net Sales(also called net flows) represent Total Premium Sales  minus surrenders, withdrawals, inter- and intra-company exchanges, and benefit payments.