Annuity Sales Hit 11-Year High In 2019: LIMRA

Annuity sales of $241.7 billion in 2019 represented the best sales in 11 years as the industry continued to rebound from regulation and other pressures.

Sales increased 3% over 2018 results, according to the Secure Retirement Institute Fourth Quarter U.S. Annuity Sales Survey.

While overall sales were the best since 2008, fourth-quarter annuity sales dipped to $57.6 billion, down 8% compared with fourth quarter 2018.

“Fixed annuity sales have driven the overall growth for the annuity market over the past four years,” said Todd Giesing, director, annuity research, SRI (formerly LIMRA SRI). “Falling interest rates in the third quarter dampened fixed product sales in the second half of the year. As a result, most fixed products experienced declines in the fourth quarter, pulling down total annuity sales results for the quarter.”

In 2019, fixed annuities represented 58% of the total annuity market. Although fixed annuity sales dropped in the fourth quarter (down 18% to $30.8 billion), robust sales in the first half of 2019 boosted annual fixed annuity sales to exceed its previous sales record of $133.5 billion.

In 2019, total fixed sales were $139.8 billion, up 5% from prior year.

“Much of the overall growth in the fixed market can be attributed to the continued growth in the fixed indexed annuity market,” Giesing said. “FIA sales have increased 11 of the past 12 years, accounting for more than half of the fixed annuity market sales.”

For the year, FIA sales were $73.5 billion, up 6% from 2018 results. This surpasses the sales record for FIA sales set in 2018.

Low Interest Rates

In the fourth quarter, FIA sales were $16.9 billion, down 13% from prior year’s results. SRI researchers point to low interest rates and increased interest in registered index-linked annuities, which offer a similar value proposition.

Fee-based indexed annuity sales continue to fall. In the fourth quarter, fee-based FIA sales were $140 million, down 17% from prior year. Fee-based products represent less than 1% of the total FIA market.

Fixed-rate deferred annuity sales dropped 29% in the fourth quarter to $9.4 billion. Again, a strong first half of the year balanced the declines of the fourth quarter. At year-end, fixed-rate deferred annuity sales totaled $47.5 billion, up 4% from last year. This is the highest level of fixed rate deferred sales since the financial crisis.

Fourth-quarter single premium income annuity sales fell to $2.1 billion, 22% lower from prior year results. Despite the quarterly decline, SPIA sales beat previous the sales record set in 2018. SPIA sales were $9.9 billion in 2019, up 2% from 2018.

Deferred income annuity sales sunk 20% in the fourth quarter, to $527 million. For the year, DIA sales totaled $2.5 billion, up 8% from prior year.

VAs Rebound

For the third consecutive quarter, variable annuity (VA) sales recorded growth. VA sales were $26.8 billion in the fourth quarter, up 8%, compared to prior year. VA sales were $101.9 billion for the year, an increase of 2% from 2018. This is the second consecutive year of growth.

Growth in the VA market was driven by registered index-linked annuity products (RILA). In the fourth quarter, RILA sales were $4.9 billion, 39% higher than prior year results.

“The impact of RILA sales on the overall VA market is significant. When you look at VA sales excluding RILAs, VA sales dropped 5% in 2019, compared to the 8% increase recorded with RILAs included,” Giesing said. “One of the things that is driving the growth in the RILA market is GLB riders. More than $400 million of fourth-quarter RILA sales were with GLB riders, representing 8% of the total RILA market.”

In 2019, RILA sales were $17.4 billion, up 55%. RILA sales represent 17% of the VA market. To demonstrate the impact RILAs are having — VA sales excluding RILAs fell 5%.

Fee-based VA sales were $850 million in the fourth quarter, 5% higher than prior year. This matches the record sales in the second quarter 2018. For the year, fee-based VAs totaled $3 billion, which is 5% lower than 2018 results. Fee-based VAs represent 3% of the total VA market.

Secure Retirement Institute's fourth quarter Individual Annuities Sales Survey represents data from 94 percent of the market.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.