Total U.S. annuity sales were $68.2 billion in the second quarter 2021, up 40% from prior year.
This represents the largest sales total for a quarter other than fourth quarter 2008 during the Great Recession, according to the Secure Retirement Institute U.S. Individual Annuity Sales Survey.
In the first half of 2021, total annuity sales increased 23% from prior year to $129.2 billion.
“SRI attributes the remarkable sales in the second quarter to strong economic conditions and consumer pent-up demand after more than a year of living with the uncertainty of the pandemic,” said Todd Giesing, assistant vice president, SRI Annuity Research. “Early indicators suggest third quarter sales will be more in line with first quarter 2021 results, given the resurgence of the pandemic over the summer and falling interest rates.”
Total variable annuity (VA) sales were $32.7 billion for the second quarter 2021, 55% higher than second quarter 2020. Year to date (YTD), total VA sales rose 33% to $62.7 billion. First half 2021 VA sales logged the highest sales totals since 2015.
Traditional VA sales — driven by strong market growth and increased consumer interest in tax-deferred investment options — grew 37% to $22.7 billion in the second quarter. YTD, traditional VA sales were $43.5 billion, a 15% jump from prior year.
RILAs Keep Surging
Registered index-linked annuities (RILAs) continue to surge. In the second quarter, RILA sales topped $10 billion, more than doubling (121%) the sales in the second quarter of 2020. In the first half of 2021, RILA sales were $19.2 billion, up 104% from prior year.
“While growth in the independent and national broker-dealer channels doubled, this quarter RILA sales also grew substantially in the career channel — up 183% — as more companies with career forces entered the market,” noted Giesing. “This expansion in distribution will contribute to continued RILA sales growth. SRI is forecasting RILA sales to be between $35 billion and $40 billion in 2021.”
Fixed indexed annuity (FIA) sales totaled $16.5 billion in the second quarter, 38% higher than prior year. YTD, FIA sales were $30 billion, improving 6% over the first half of 2020. All distribution channels recorded double-digit growth in the second quarter with banks (84%), independent broker-dealers (BDs) (53%) and national full-service BDs (63%) experiencing the largest growth.
“Increased interest rates in the second quarter benefited FIA sales as companies were able to raise cap rates making the product more attractive to investors,” said Giesing. “While interest rates have dropped off in the third quarter, we believe some of the product innovation introduced by carriers will allow FIA sales to continue to grow through the end of the 2021.”
Fixed-rate deferred (FRD) annuity sales were $16 billion in the second quarter, 25% higher than second quarter 2020. In the first six months of 2021, FRD annuity sales totaled $30.6 billion, up 35% over the same period last year. SRI expects sales to level off in the second half of 2021 but year-end sales results should be at least $45 billion.
Immediate income annuity sales were $1.4 billion in the second quarter, level with second quarter 2020. Year to date, immediate income annuity sales were $2.9 billion, down 12% from prior year results.
Deferred annuity (DIA) sales increased 44% to $510 million in the second quarter. In the first half of 2021, DIA sales were $930 million, 13% higher than prior year.
Total fixed annuity sales rose 28% in the second quarter to $35.5 billion. Year to date, total fixed annuity sales were $66.5 billion, 15% above the first half of 2020.
AIG On Top
For the year to date, American International Group regained the top spot with $9.7 billion in annuity sales. Jackson National Life finished second with $9.6 billion and New York Life third with $8.2 billion.
Jackson National led the way by a big margin in VA sales with $9.4 billion. Equitable Financial finished second in VA sales with $7 billion.
AIG topped the LIMRA sales rankings in 2018 and much of 2019 before slipping. In July, AIG sold a 9.9% equity stake in its Life & Retirement business to Blackstone for $2.2 billion in an all-cash transaction. AIG had planned to sell a 19.9% stake in the Life & Retirement business.
In the meantime, Todd Solash, CEO, Individual Retirement and Life Insurance, AIG Life & Retirement, said the insurer is adapting well to the annuity market.
“Our broad position across products and channels, as well as our ability to respond to changing market conditions, continued to serve us well in the second quarter," he said. "Our retail annuity sales increased from first quarter levels, and we saw growth across our entire annuity offering."
Second quarter 2021 annuities industry estimates are based on SRI’s quarterly annuity sales survey, which represents 93% of the total market.