Nov. 18 (Bloomberg) -- Variable annuity sales in the U.S. declined for a sixth straight quarter as life insurers increased prices on the equity-linked retirement products and bailed-out companies scaled back.

Sales slipped 16 percent to $31.7 billion in the three months ended Sept. 30 from $37.8 billion in the year-earlier period, trade group LIMRA International said in data posted on its Web site. Prudential Financial Inc., the second-biggest U.S. life insurer, was the top seller in the period after trailing larger rival MetLife Inc. in the first half of the year.

Life insurers raised variable annuity prices this year after the equity market declines of 2008 increased the cost of guaranteeing minimum returns for customers. Sales in the first nine months of the year at bailed-out companies ING Groep NV, American International Group Inc. and Hartford Financial Services Group Inc. were less than half of their full-year 2008 totals, according to LIMRA.

“We are taking market share, but also raising prices to remain competitive,” Bernard Winograd, Newark, New Jersey-based Prudential’s executive vice president for U.S. businesses, told analysts on a Nov.5 conference call.

The Standard & Poor’s 500 Index dropped 38 percent in 2008, pushing Prudential and Hartford into annual losses of more than $1 billion each. New York-based MetLife, which used hedges against slumps to remain profitable each quarter last year, reported $2.57 billion in net losses in the first nine months of this year as markets improved.

Prudential, MetLife

Prudential had about $5.8 billion in variable annuity sales to top the rankings in the third quarter after finishing sixth in 2008. MetLife, the No. 2 company last year, was second for the quarter with sales of $3.4 billion. TIAA-CREF, the retirement-planning firm, was third in the period with $3.3 billion of sales after leading the market last year.

The pace of industry declines is slowing after 24 percent slide in the second quarter and a 27 percent drop in the first.

AIG, which got a rescue package of $182.3 billion from the U.S., was ninth in the third quarter with $1.2 billion in sales. The New York-based insurer had sales of $8.2 billion for the full year of 2008. ING, bailed out by the Dutch government, had $1.6 billion of sales in the quarter and $13.8 billion last year. Hartford’s sales were $621 million and $7.9 billion.

The company rankings were calculated by Bloomberg based on first-half and nine-month data provided by LIMRA.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

Last Updated: November 18, 2009 13:18 EST