DTCC Releases Report on January Annuity Product Activity

NEW YORK--(BUSINESS WIRE)--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.

“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”

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.

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first time since July 2011 the net cash flows into non-qualified accounts were negative, meaning that more funds were withdrawn than added.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%

About DTCC

DTCC, through its subsidiaries, provides clearance, 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 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 more than 3.6 million securities issues from the United States and 121 other countries and territories, valued at US$36.5 trillion. In 2010, DTCC settled nearly US$1.66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and overseas. For more information, please visit www.dtcc.com.

About Analytic Reporting and I&RS

Analytic Reporting for Annuities is an award winning online information solution containing aggregated data from transactions processed by the I&RS of DTCC. 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. I&RS 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 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 to DTCC customers. 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.

See DTCC’s web site at http://www.dtcc.com/analytics for more information about the service.