Investors wary of increased market volatility and growing inflation drove total U.S. annuity sales to the highest levels since 2008, and the third highest recorded in history, according to results from the Secure Retirement Institute (SRI) U.S. Individual Annuity Sales Survey.
Total annuity sales were $254.6 billion in 2021, up 16% from 2020. In the fourth quarter, annuity sales were $62.8 billion, 7% higher than fourth quarter 2020.
“After 2020, there was significant pent-up demand for investment options that offered a balance of protection and growth,” said Todd Giesing, assistant vice president, SRI Annuity Research. “As a result, registered index-linked annuity (RILA) sales had a record year and fixed indexed annuities experienced the strongest growth in three years. Together, sales of these products represented 40% of total sales in 2021.”
RILA sales broke records in the fourth quarter and for the year. Fourth quarter RILA sales were $10.3 billion, 22% higher than prior year. In 2021, RILA sales were $38.7 billion, 61% higher than in 2020.
“RILA sales benefited from current economic conditions, investors’ desire for a balance of protection and growth, and broader market offerings as new carriers enter the market,” said Giesing. “SRI is forecasting RILA’s sales growth to continue in 2022.”
Fixed indexed annuity (FIA) sales were $16.6 billion, 18% higher than fourth quarter 2020. Fee-based FIA sales jumped 55% in the fourth quarter to $74.5 million. Total FIA sales rose 15% in 2021, to $63.7 billion, representing the highest FIA sales growth in three years.
“Accumulation-focused FIAs drove sales growth in 2021 as investors look for principal protection with greater investment growth to offset rising inflation,” noted Giesing. “The expected interest rate increases and continued product innovation will make FIAs more attractive in 2022.”
Complementing the strong RILA growth, traditional VA sales also experienced solid growth. Traditional VA sales increased 13% to $21.7 billion in the fourth quarter. For the year, traditional VA sales totaled $86.6 billion, up 16% from prior year, ending nine years of declines for this product. Strong demand for tax-deferred investment strategies was a key driver of traditional VA sales growth in 2021.
Total variable annuity (VA) sales were $32.3 billion in the fourth quarter, up 17% from prior year. For the year, VA sales increased 27% to $125.3 billion. Growth in the VA market was widespread, with 9 in 10 VA carriers reporting double-digit gains in 2021.
Fee-based VA sales were $1.24 billion in the fourth quarter, up 24% from prior year. This marks the fifth consecutive quarter of $1 billion+ in fee-based VA product sales. In 2021, fee-based VA sales were $4.9 billion, 49% higher than prior year.
Total fixed annuity sales were $30.8 billion, nearly level with fourth quarter 2020 results. For the year, total fixed annuities increased 7% to $129.3 billion.
Fixed-rate deferred annuity sales were $11 billion in the fourth quarter, down 20% from fourth quarter 2020 results. For the year, fixed-rate deferred sales totaled $53.1 billion, 2% higher than prior year.
“While interest rates improved throughout 2021, the industry experienced a decline in fixed-rate deferred sales throughout the year,” noted Giesing, “This is a sign that the flight to safety has subsided and a portion of investors have started to seek solutions with higher return potential."
Immediate income annuity sales were $1.7 billion in the fourth quarter, 6% higher than the same period 2020. For the year, immediate income annuity sales improved 2% to $6.4 billion.
Deferred income annuity sales fell 5% to $430 million in the fourth quarter. In 2021, total deferred income annuity sales were $1.9 billion, up 11% from prior year.
To view fourth quarter and year-end sales results visit Fourth Quarter 2021 Annuities Industry Estimates in LIMRA’s Fact Tank. Fourth-quarter 2021 annuities industry estimates are based on SRI’s quarterly annuity sales survey, which represents 91% of the total market.