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Vacated Fiduciary Rule, higher interest rates lead to record 2018 annuity sales

Insurance Forums Staff

Total annuity sales in the fourth quarter of 2018 were the highest they have been in any quarter since the beginning of 2009, according to new data released Feb. 20 from the LIMRA Secure Retirement Institute’s Fourth Quarter 2018 U.S. Retail Annuity Sales Survey.

With the cloud of the Fiduciary Rule gone, total annuity sales in 2018 increased an impressive 14% to $232.1 billion, compared with 2017 results.

Total annuity sales for the fourth quarter were $62.1 billion, a 22% increase compared to the same quarter of 2017, and the first time annuity sales have exceeded $60 billion since the fourth quarter of 2015.

“Individual annuity sales for 2018 finished the year strong, particularly sales of fixed annuity products,” said Todd Giesing, director, Annuity Research, LIMRA Secure Retirement Institute. “All fixed annuity products experienced growth in 2018, and fixed annuity sales accounted for nearly 60% of overall individual annuity sales, a significant change from just five years ago.”

Fixed annuity sales reach record levels

Total fixed annuity sales increased in the fourth quarter, up 47% to $37.4 billion. For the year, fixed annuity sales rose 25% to $132 billion. This is an all-time high for fixed annuity sales.

Fourth quarter indexed annuity sales set an all-time quarterly record at $19.5 billion, a 40% increase, compared with fourth quarter 2018 results. For the year, fixed indexed annuity sales rose 27% to $69.6 billion, compared with prior year. This is also a record and exceeds the previous annual fixed indexed annuity sales record by $10 billion.

“Total fixed annuities had a record breaking fourth quarter, achieving the highest level of sales for fixed annuities in a quarter – ever,” noted Giesing. “This jump in quarterly sales can be attributed to higher interest rates and increased equity market volatility. This is the fourth consecutive year where annual fixed annuity sales surpassed $100 billion. This is the first time it has occurred since LIMRA SRI began tracking sales.”

Fixed rate deferred annuities (Book Value and MVA) sales increased 74% in the fourth quarter to $12.9 billion. Full year fixed-rate deferred annuity sales for 2018 were $44.2 billion, 29% higher than 2017 results. This is the first time annual fixed-rate deferred sales have exceeded $40 billion since 2009.

Fixed immediate annuity sales rose 29% in the fourth quarter to $2.7 billion, which represents the highest quarterly sales recorded for immediate income annuities. For the year, income annuity sales increased 17%, to $9.7 billion.

Deferred income annuity (DIA) also increased in the fourth quarter, up 20% to $655 million. For the year, DIA sales were 4% higher than 2017 results, reaching $2.3 billion.

VA sales decline slightly in 4Q

U.S. variable annuity (VA) sales were $24.7 billion in the fourth quarter, down 3% compared with prior year results. Total VA sales for 2018 were $100.1 billion, a 2% increase over 2017 results. Fixed annuity sales have outperformed VA sales in 10 of the last 12 quarters.

Registered indexed-linked annuity sales (RILAs) topped $3 billion this quarter, an increase of more than 10%. For the year, RILA sales will near $11 billion and represent more than 10% of total VA sales.

The fourth quarter 2018 Annuities Industry Estimates can be found in LIMRA’s Data Bank. To view variable, fixed and total annuity sales over the past 10 years, visit Annuity Sales 2008-2017. Top 20 annuity rankings will be available in mid-March.



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