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Indexed annuity sales top all-time record in 2Q, but declining variable sales drag overall totals to 3% decline

Brian Anderson

Fixed indexed annuity sales totaling $16.2 billion in the second quarter of 2016 were 30% higher than 2Q in 2015 and surpassed all prior quarterly sales records, according to LIMRA Secure Retirement Institute’s Second Quarter U.S. Annuity Sales survey, released Aug. 16.

For the first half of the year, indexed annuity sales increased 32% to $31.9 billion, compared to 2015. As reported earlier this month, the Institute expects indexed annuity sales to exceed $60 billion by the end of the year.

“The decline in interest rates benefitted indexed annuity sales once again as consumers seek out ‘safe yield’,” said Todd Giesing, assistant research director, LIMRA Secure Retirement Institute. “The indexed market is extremely competitive at this time as indexed products remain an attractive alternative to variable annuity (VA) products. This has been beneficial for independent broker-dealers, and in fact, we expect this channel to post record indexed annuity sales this year.”

Rankings of the top 20 indexed annuity carriers, which accounted for 90% of the industry sales total for the first half of the year, appear below.

Variable annuity slump nets 3% overall decline

Despite the fact that sales in all retail fixed product lines recorded double-digit growth, a big drop in variable annuity sales pulled the overall results down. In second quarter 2016, total U.S. annuity sales were $58.4 billion, 3% lower than the prior year.

In the second quarter, VA sales totaled $26.9 billion, down 25%. VA sales fell 22% in the first 6 months of 2016 to $53.5 billion. This is lowest first half of the year for VA sales since 1998 and the first time VA sales have been below $30 billion for two consecutive quarters since 2002.

“Low interest rates and a focus on implementing the DOL fiduciary rule have hampered product innovation, which we usually see strong activity in the second quarter,” noted Giesing.

The Institute forecasts VA sales to drop 15-20% in 2016 and another 25-30% drop in 2017 when the DOL fiduciary rule goes into effect. The drop in VA sales in 2016 is expected to be offset by growth in the fixed annuity market and total annuity sales should be in line with 2015’s results.

Double-digit increases in fixed annuity sales

Other fixed annuity sales continued to see strong sales growth in the first half of 2016. Sales of fixed-rate deferred annuities, (Book Value and MVA) improved 46% in the second quarter to $10.5 billion. Year-to-date, fixed rate deferred annuity sales were $22.5 billion, which is 67% higher than prior year.

Second quarter fixed immediate annuity sales totaled $2.5 billion, 14% more than prior year. In the first half of 2016, immediate annuity sales increased 19% to $5 billion. Many of the top companies have put more of an emphasis on their income annuity sales, with seven of the top 10 writers experiencing growth of 25% or higher. The Institute forecasts fixed immediate annuity sales will exceed $10 billion in 2016, 10-15% higher than 2015 totals.

In the second quarter, deferred income annuity (DIA) sales jumped 43% in the second quarter, to $870 million. This is the highest quarterly sales total for DIA products since the Institute started reporting DIA sales results. Nine of the top 10 writers experienced growth of 25% or more. In the first half of 2016, DIA sales rose 37% to $1.6 billion. Institute analysts expect DIA sales to have an upward trajectory in the second half of the year driving DIAs to a record sales year in 2016, exceeding $3 billion.

Overall, sales of fixed annuities jumped 32% in the second quarter, to $31.5 billion. Year-to-date, fixed annuity sales totaled $63.8 billion, an increase of 39% compared with the same period in 2015.

The 2Q 2016 Annuities Industry Estimates can be found in the updated Data Bank, which also features a breakout of fixed-rate annuity sales rankings.

LIMRA Secure Retirement Institute’s second quarter U.S. Individual Annuities Sales Survey represents data from 96% of the market.

Company Rankings: 2Q YTD U.S. Individual Indexed Annuity Sales

  1. Allianz Life of North America – $5,838,461,000
  2. American Equity Investment Life – $3,213,473,000
  3. Great American – $2,051,809,000
  4. AIG Companies – $1,948,989,000
  5. Athene Annuity & Life Assurance – $1,599,301,000
  6. Nationwide – $1,519,600,000
  7. Midland National – $1,461,510,000
  8. Symetra Financial – $1,200,439,000
  9. Global Atlantic Financial Group – $1,144,104,000
  10. North American Company – $1,000,964,000
  11. Security Benefit Life – $1,000,547,000
  12. Voya Financial – $987,140,000
  13. Lincoln Financial Group – $932,633,000
  14. Fidelity & Guaranty Life – $912,796,000
  15. MetLife – $910,933,000
  16. Pacific Life – $872,331,000
  17. EquiTrust Life – $722,084,000
  18. National Life Group – $546,008,000
  19. Western Southern Group – $443,331,000
  20. Bankers Life & Casualty – $378,780,000

Top 20 cumulative: $28,685,231,000

Total industry: $31,900,000,000

Source: LIMRA Secure Retirement Institute U.S. Individual Annuities Sales Survey

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