Profit at Allianz Life Insurance Co. of North America jumped 37 percent to $586 million for 2012 — but not on annuity sales.

Sales of the company's popular investment vehicles continue falling as ultra-low interest rates rock the life and annuity industries.

Golden Valley-based Allianz Life, a unit of German insurance giant Allianz, said Thursday that growth in operating profits was mainly driven by its growing asset base, as well as trimming benefits paid to customers, the one-time sale of bonds and other securities and managing expenses. Assets under management grew 8 percent to $102.9 billion.

Total premiums for Allianz Life's products dropped 14 percent from 2011 to $9.4 billion, with the decline deepening in recent quarters.

Variable annuities fell 12 percent to $3.3 billion. Fixed annuities, mostly fixed index annuities that are Allianz Life's bread and butter, fell 16 percent to $5.5 billion. The company's traditional life insurance business rose 75 percent to $65 million.

Annuities are a retirement savings product in which consumers pay a lump sum in exchange for regular payments through the contract or until the person dies.

Like other annuity players, Allianz Life is sacrificing sales for profits, said Judith Alexander, director of sales and marketing at Beacon Research, an independent annuity research firm in Evanston, Ill.

Allianz Life's top-selling indexed annuity, the MasterDex X, continues to do well but has fallen from its No. 1 spot. "Their sales have declined largely because other products out there are offering more generous terms," Alexander said.

Market conditions have been so challenging many companies have pulled back or exited the variable annuity business.

Executives have said Allianz Life can weather the storm and turn sales around. "In a tough environment our balance sheet is significantly stronger," said Walter White, Allianz Life president and CEO.

The company has reduced the distributors it uses, White said, and that has affected sales.

Allianz is designing products that work better with low interest rates. It introduced a new fixed index annuity in January and plans to introduce new variable annuity in July, he said.

Jennifer Bjorhus • 612-673-4683