Annuity sales up 21% in the first quarter, LIMRA reports

Annuity sellers had another very strong quarter in Q1, with $113.5 billion in sales, 21% higher than the first quarter 2023.

Quarterly sales fell just shy of the record set in the fourth quarter 2023, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey, representing 84% of the total U.S. annuity market. It is the highest first-quarter sales results since LIMRA started tracking sales in the 1980s, the organization said in a news release.

“The remarkable sales trends over the past two years continued into 2024. Favorable economic conditions and rising investor interest in securing guaranteed retirement income have resulted in double-digit sales growth in every product line,” said Bryan Hodgens, head of LIMRA research. “While there are potential regulatory and economic headwinds in the second half of the year, LIMRA expects annuity sales to continue to perform well.”

LIMRA broke down quarterly sales by category:

Fixed-rate deferred

Total fixed-rate deferred annuity (FRD) sales were $48 billion in the first quarter, 16% higher than first-quarter 2023 sales. FRD annuities remain the primary driver of annuity sales growth, representing more than 42% of the total annuity market in the first quarter.

“Eighty-five percent of FRD sales are short duration products [less than five years]. Higher interest rates combined with insurers’ ability to offer, on average, better crediting rates, have propelled product sales to another level,” Hodgens noted. “To put these first quarter results in perspective, from 2008 - 2021, the average annual FRD sales were just $42 billion, 14% lower than first quarter 2024 results.”

Fixed indexed annuities

Fixed indexed annuity (FIA) sales had a record first quarter. FIA sales totaled $29.3 billion, up 27% from the prior year.

“FIA products continue to offer very competitive crediting rates while protecting the principal investment, an attractive proposition for today’s investors,” Hodgens said.

Income annuities

Income annuity product sales set a quarterly record due to rising interest rates. Single premium immediate annuity (SPIA) sales were $4 billion in the first quarter, 19% higher than the prior year’s results. Deferred income annuity (DIA) sales were $1.1 billion in the first quarter, increasing 35% year over year.

Registered index-linked annuities

For the fourth consecutive quarter, registered index-linked annuity (RILA) registered record quarterly sales. RILA sales increased 40% in the first quarter to $14.5 billion.

“Product innovation and new market entrants suggest the RILA market still has significant growth potential. LIMRA is forecasting RILA sales to exceed $50 billion in 2024,” Hodgens said.

Traditional variable annuities

Traditional variable annuity sales improved in the first quarter, up 13% year over year to $14.5 billion.

“Strong equity market performance over the past year has made traditional VAs more attractive,” Hodgens said. “While these products will not command the market share they did 10 years ago, LIMRA predicts the continued equity market growth will propel traditional VA sales to grow as much as 10% in 2024 from current levels.”

Preliminary first quarter 2024 annuity industry estimates are based on monthly reporting. A summary of the results can be found in LIMRA’s Fact Tank.

This report compiled by InsuranceNewsNet staff.