In 2010, total annuity sales through banks hit lows not seen since the turn of the 21st century, according to a recent report from Kehrer-LIMRA.

For the second straight year, bank sales of annuities in 2010 posted a 25 percent decline from 2009, after falling 18 percent the prior year. Banks sold $33.2 billion of annuities in 2010, the lowest level since the $31 billion sold in 2000.

"Although sales of annuities through financial institutions were a bit of a disappointment, the downturn in banks reflected declines in the broader annuity industry," said Jennifer Parmelee Witt, associate research director at Kehrer-LIMRA.

Overall declines in the U.S. individual annuity industry, coupled with a larger slide in the bank space, pushed the bank share of total sales down to 15.4 percent, according to the report. The last time the bank channel’s share of total annuity sales were this low was in 1998.

Declines in total annuity sales could have been larger if variable annuities (VAs) had not rebounded, according to a statement. In 2010, banks sold $16.3 billion of VAs, a 27 percent increase over 2009, but well below the peak of $25.2 billion in 2007. The bank share of U.S. individual variable annuity sales increased to 11.6 percent from 10 percent.

"While it was heartening to see growth for variable annuities, demand is fragile and it will take time, a strong stock market and renewed investor confidence before we see sustained growth," said Witt.

Fixed annuities, driven by lackluster interest rates and inflationary fears brought about by the Federal Reserve’s quantitative easing policy, were at the lowest level of the past decade at $16.9 billion. The share of fixed annuities sold through financial institutions dropped to 22.5 percent, nearly half of the all-time high of 40.1 percent achieved in 2001.