Annuity sales set another record in first half of 2024

Total annuity sales hit a whopping $215.2 billion in the first half of 2024, a 19% jump from prior year results, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey.

That figure sets a new record and compares to $219 billion in total sales for all of 2020. Sales were up 21% in Q1, LIMRA reported.

In the second quarter, total annuity sales increased 25% year over year to $108.5 billion. It is the second-highest quarterly total ever recorded, just shy of the quarterly sales record set in fourth quarter 2023, LIMRA said in a news release. Every product line except fixed immediate annuities posted double-digit gains.

“This time last year, LIMRA reported a record-shattering second quarter and first half of the year. Those results wane in comparison to this year’s results,” said Bryan Hodgens, senior vice president and head of LIMRA research. “Annuities have benefited from the favorable economic conditions and the Federal Reserve not cutting interest rates this year. We also believe demographic trends and a growing awareness of unique value proposition annuities offer have shifted the U.S. annuity market post pandemic, resulting in 15 consecutive quarters of strong sales growth.”

LIMRA broke down sales by category:

Fixed indexed annuities

Fixed indexed annuity sales had another record quarter, totalling $29.7 billion, 17% higher than prior year. Year-to-date, FIA sales were $58.3 billion, up 20% year over year.

“Investor interest in products that offer downside protection with upside growth potential remains high. To put these results into perspective, just two years ago, FIA sales were $10 billion lower than the second quarter 2024 results,” noted Hodgens. “Even with the prospect of possible rate hikes later this year, LIMRA expects FIA product sales to remain strong through 2024 and possibly eclipsing the record set in 2023.”

Registered index-linked annuities

For the fifth consecutive quarter, registered index-linked annuities saw record quarterly sales. In the second quarter of 2024, RILA sales were $16.2 billion, 42% higher than prior year. In the first half of 2024, RILA sales jumped 41% to $30.7 billion.

“For the third consecutive quarter, RILA sales have outpaced traditional variable annuity sales," Hodgens said. "More than a half dozen carriers have launched or enhanced their RILA products in the first half of the year. These product innovations are driving a more competitive landscape and signaling the RILA market still has significant growth potential. LIMRA is forecasting RILA sales to surpass $50 billion in 2024."

Fixed-rate deferred annuities

Total fixed-rate deferred annuity sales were $40 billion in the second quarter, 32% higher than second quarter 2023 sales but down 7% from first quarter 2024. YTD, FRD annuity sales totaled $83.1 billion, up 15% year over year.

“While many may think the surge in FRD sales is from replacement contracts, our data suggests two-thirds of sales are coming from new money. After years of ultra-low interest rates, LIMRA believes conservative investors, who were sitting on the sidelines reluctant to lock in low rates, have poured money into the market as rates rose over the past two years,” said Hodgens. “While the margin has shrunk, FRD crediting rates, on average, continue to outperform CD rates, making them still the most attractive, short-term solutions for risk-adverse investors.”

Traditional variable annuities

In response to the S&P market growing nearly 10% in the second quarter, traditional variable annuity sales improved. Traditional VA sales rose 18% in the second quarter to $15.6 billion. YTD, traditional VA sales were $29.3 billion, a 12% gain year over year.

Income annuities

Despite the Treasury’s 10-year interest rate averaging above 4.4% in the second quarter, single premium immediate annuity (SPIA) sales fell 9% year over year to $3.1 billion in the second quarter. In the first six months of the year, SPIA sales dropped 2% to $6.7 billion.

Deferred income annuity sales soared 62% to $1.7 billion in the second quarter. YTD, DIA sales jumped 53% to $2.9 billion.

Preliminary second quarter 2024 annuity industry estimates are based on monthly reporting. A summary of the results can be found in LIMRA’s Fact Tank. The LIMRA annuity report represents 92% of the total U.S. annuity market.

The top 20 rankings of total, variable and fixed annuity writers for the first half of 2024 will be available in mid-August, the release said, following the last of the earnings calls for the participating carriers.