Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
WINDSOR, Conn., Aug. 18, 2014 — Total U.S. annuity sales reached $61.4 billion in second quarter, improving eight percent from prior year.
In the first six months of 2014, total U.S. annuity sales increased 10 percent, compared with 2013.
"This is only the second time we have seen quarterly sales over $60 billion since the third quarter of 2011," said Todd Giesing senior analyst, LIMRA Secure Retirement Institute Annuity Research. "Despite declining interest rates during the first six months of this year, fixed annuity sales continue to drive overall annuity sales growth."
Total fixed annuity sales were $25.2 billion in the second quarter, up 34 percent versus prior year. Year-to-date (YTD), fixed annuity sales equaled $49.1 billion, a 39 percent increase from 2013.
Sales of fixed rate deferred annuities (Book Value and MVA) grew 30 percent in the second quarter, compared with prior year. Fixed-rate deferred annuities reached $15.8 billion in the first half of the year, a 42 percent increase compared to last year.
Index annuity sales grew 40 percent in the second quarter, setting a new quarterly record of $13 billion. This is the first time that quarterly index annuity sales have accounted for more than 50 percent of total fixed annuity sales, with second quarter sales accounting for 52 percent of total fixed sales. YTD, indexed annuity sales grew 41 percent, totaling $24.3 billion.
"With a record quarter of index annuity sales driven by product innovation and expansion of distribution, combined with nothing to indicate that sales will significantly drop in the near future, sales may be pushing $50 billion for 2014," noted Giesing.
Indexed annuity guaranteed living benefits (GLBs) election rates continue to be strong, with 72 percent electing a GLB when available (four percentage points higher than in the first quarter).
Deferred income annuity (DIA) sales reached $710 million in the second quarter, 33 percent higher than prior year. In the first six months of 2014, DIAs jumped 43 percent, totaling $1.3 billion. The top three writers continue to drive most of the DIA sales, accounting for 85 percent of sales.
Single premium immediate annuity sales were up 37 percent in the second quarter to reach a record-matching $2.6 billion. LIMRA Secure Retirement Institute research shows that this is industry-wide growth — not coming from just one carrier.
Variable annuity sales fell five percent in the second quarter, totaling $36.2 billion. YTD, VAs reached $70.4 billion, a four percent drop from 2013. LIMRA Secure Retirement Institute researchers noted many of the top VA sellers are focusing on diversification of their VA GLB business. In the second quarter, a few of the top companies entered the market with accumulation focused product without a GLB rider.
Election rates for GLB riders, when available, were 78 percent in the second quarter of 2014.
The second quarter Annuities Industry Estimatescan be found in the updated Data Bank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2004-2013. The 2014 top 20 rankings of total, variable and fixed annuity writers can be viewed at 2014 Top 20 Annuity Writers
LIMRA Secure Retirement Institute's second quarter U.S. Individual Annuities Sales Survey represents data from 95 percent of the market.