1Q Annuity Sales Up 38% Year Over Year, LIMRA Reports

From Staff and Wire Reports

First quarter 2019 fixed annuity sales were $38 billion, a 38% increase compared with first quarter 2018, according to LIMRA Secure Retirement Institute’s First Quarter 2019 U.S. Retail Annuity Sales Survey.

Fixed sales have outperformed variable annuity (VA) sales in 11 of the last 13 quarters and they represent 63% of overall annuity sales.

Overall, U.S. annuity sales were $60.8 billion; an increase of 17% from the first quarter 2018 results. It is the highest first quarter for total annuity sales going back a decade.

“This is the strongest start for fixed annuities ever,” said Todd Giesing, annuity research director, LIMRA Secure Retirement Institute. “The uptick in fixed annuity sales continued the momentum fixed annuities experienced in 2018, and was bolstered by recent volatile equity markets, which had investors seeking solutions with guarantees.”

Indexed annuity sales increased 24% in the first quarter, totaling $18 billion. This is the third consecutive first quarter growth for indexed sales.

Sales of fixed-rate deferred annuities, (Book Value and MVA) were $15.1 billion in the first quarter – up from $8.7 billion from first quarter 2017 results. After multiple quarters of following the 10-year treasury rate, this quarter, fixed-rate deferred sales rose 68% despite declines in the treasury rate growth.

“The significant turbulence in the equity markets in the fourth quarter 2018 really sparked a flight to safety,” said Giesing. “This resulted the highest level of first quarter sales for indexed annuities we have ever seen, and the highest level of fixed rate deferred sales since 2009.”

Single premium immediate annuity (SPIA) sales had a record first quarter up 33% to $2.8 billion, compared with prior year results. Deferred income annuity (DIA) sales increased 23% in the first quarter 2019 to $633 million. DIA sales have remained in the $520-$660 million range for the past 10 quarters.

VA Sales Continue To Lag

In the first quarter, variable annuity (VA) sales totaled $22.8 billion, down 7% from the prior year. Despite a slight uptick for overall yearly VA sales at the end of 2018, VA sales can’t seem to gain traction.

“The steep market declines from fourth quarter last year have impacted VA sales this quarter,” noted Giesing. “While we did see low sales in January and February, March sales were a bit stronger, indicating we will likely see better results in the second quarter. Despite the expectations of improvement, VAs have an uphill climb.

"Beyond economic factors, competitive fixed annuity products have made the landscape even more difficult for the VA market. SRI forecasts VA sales in 2019 to decline slightly.”

Registered indexed-linked annuity sales (RILAs) were $3.5 billion this quarter, an increase of 60% compared with first quarter 2018 results. These products represent 15% of total VA sales. Excluding RILA products, variable annuity sales declined 14%.