June 1, 2022 Monthly Focus

Annuity sales boom again in 2021, Morningstar, Beacon report

Annuity sales recovered ground lost to the pandemic and then some in 2021.

By Staff Reports

Sales of fixed and variable annuities were $233.1 billion in 2021, an increase of 12.3 percent over 2020 sales of $207.5 billion and the highest annual annuity sales since 2008, when annuity sales reached an all-time high of $261.5 billion, according to the Insured Retirement Institute.

The trade group today announced final 2021 market data for the U.S. annuity industry based on data reported by Beacon Annuity Solutions and Morningstar, Inc.

Total fixed annuity sales rose 2.1 percent to $114.1 billion as strong fixed indexed sales offset flat book value and lower sales of market value adjusted annuities. Variable annuities sales rose 24.2% to $119 billion from $95.8 billion in 2020.

Book value fixed annuity sales in 2021 were flat year-over-year at $24.5 billion, while market value adjusted annuity sales fell 8.5 percent to $22.4 billion. Sales of fixed indexed annuities drove the slight overall gain in fixed annuity sales, rising 8.7 percent to $60.2 billion for the year. Income annuity sales fell 5.1 percent to $7.0 billion.

Sales of variable annuities other than registered index-linked annuities (RILAs, which are structured variable products that use index options to provide both upside potential and downside protection) rose 11.2 percent to $79.9 billion. Still, the growth driver in 2021 for variable annuities was RILAs, sales of which grew 63.3 percent to $39.1 billion from $24.0 billion in 2020.

Roughly $59 billion of sales were in qualified plans in the fixed market, and $55.1 billion were non-qualified. Variable annuities posted $72.2 billion in qualified sales and $46.8 billion in non-qualified.

According to Morningstar, variable annuity net assets rose 1.2 percent to end the fourth quarter at $2,130.4 billion versus $2,105.8 billion at the end of 2020. Equity funds, the second-largest asset class, were up 8.2 percent over the second quarter, reflecting the strong recovery of equity markets from the COVID-induced drop in 2020. Net asset flows in variable annuities were -$86.4 billion in 2021 versus -$75.9 billion in 2020.