Banner sales a theme in year’s top 10 annuity articles

This has been very, very good year for annuities.

The bear market for stocks and rising interest rates provided a perfect combination for a winning 2022 for the products, mostly fixed-rate deferred, indexed and registered index-linked annuities.

Not so much for variable annuities, which slumped with the markets.

That was a theme that ran through the most-read articles for the year. But there was a warning among the articles that raised a red flag about the growth in proprietary indexes.

Indexed product sellers see ‘attractive’ markets after Fed rate hikes

On July 1, readers made an article about the implications of the Federal Reserve’s historic .75-point increase in its funds rate the No. 1 most-read annuity story of the year.

After years of paltry interest rates that translated into lackluster annuity offerings, the industry cranked up rates with an eye toward a booming second half of the year. That hope bore out when the third quarter turned out to be a boffo one for multiyear guaranteed and indexed annuities in particular.

Strongest Life-Annuity Market In 20 Years, Conning Says

Even before the interest rate hike, conditions were set for a solid year for annuities, according to a Conning study reported in a Feb. 16 article.

Researchers said conditions were the best in 20 years for indexed and variable annuities, citing a search for better results in a low-interes rate environment. That was before the stock market hit the skids and the Federal Reserve started raising rates.

In 2022, VAs did not have as strong a year as expected, but registered index-linked annuities surpassed expectations. Of course, indexed annuities broke sales records later in the year.

‘Crazy’ evolution of life, annuity indexes draws scrutiny, says expert

In a July 1 article, expert Sheryl Moore was featured as she raised the warning flag on insurance companies pushing boundaries with proprietary indexes.

As the CEO of Moore Market Intelligence and Wink Inc., Moore has been on the front line for decades as the industry transitioned from bad-mouthing indexed products to developing evermore complex indexes. When she started Wink 17 years ago, only a dozen indexes were available. Now there are more than 150.

Moore’s concerns were that the indexes are not only confusing for consumers, but are also likely to attract regulatory and legislative attention.

2021 Annuity Sales Highest In 13 Years, LIMRA Reports

Last year was a high platform to launch into 2022 sales, with 2021 showing the strongest sales in 13 years, according to LIMRA.

Total U.S. annuity sales in 2021 totaled $254.8 billion, up 16% over 2020, and making it the third strongest in recorded history. With the booming stock market last year, variable annuities did double-digit gains, with registered index-linked annuities also showing a strong performance. It was a standout year for VAs for the first time in a decade, but it would be a brief moment in the spotlight as stock markets hit rocky waters this year. RILAs had a heck of a year with a 62% increase over the prior year.

Indexed also did well with a 15% increase over the previous year, a trend that would continue into 2022. Fixed-rate deferred, or multiyear guaranteed, annuities did well with a 2% increase year-over-year, which might not sound like a lot, but LIMRA said it was the best showing since the Great Recession. Higher interest rates would boost the products far higher in 2022.

Don’t be fooled: Only an insurance license needed to sell qualified annuities

Readers reached back into the archives to resurrect a July 14, 2017, commentary from Kim O’Brien, a longtime annuity advocate.

At the time, the perennial Department of Labor Fiduciary Rule was still in full roil, with the Trump Administration indicating it would pull back the regulation. O’Brien was reacting to questions from marketing organizations asking if advisors needed a Series 65 license to roll over money from a qualified retirement account into an annuity. She emphatically said they did not.

The issue is still roiling.

After a blistering 2022 in life/annuity sales, expect a cooler 2023, S&P says

Although life insurance and annuity sales were going strong by mid-year, that momentum was likely to slow, according to a July 25 article focusing on an S&P Global study.

Part of the shift would be due to the cooling demand for end-of-life planning as we move farther away from the depths of COVID mortalilty and lockdowns, according to the report. Another boost to sales was a change to tax code that allowed policyholders to add premium without losing the contract’s tax advantage. Although researchers expected a down year into 2023, they predicted an uptick afterward.

S&P expected that annuities would continue to do well, especially with the growth of private equity cash into the industry. But S&P also warned that the P/E money might attract more attention from regulators.

Commentary: Why we must join together to launch a bold new era of annuity sales growth

In recognition of Annuity Awareness month, David Maccia, founder of retirement planning firm Wealth2k, offered a rousing call to sales action for the industry in a June 1 commentary.

Macchia made the point that only 3% of retirement income comes from annuities. If you believe in the power of annuities to help families “that 3% statistic should turn your stomach,” he wrote.

The annuities market should be able to expand because the annuities should not have to be sold, but be among the products with greatest consumer-driven demand; annuity wholesale distribution networks should not generate only the most meager penetration of the most dynamic and fastest-growing wealth management channel; the industry should develop a direct-to-consumer segment like Vanguard while causing no disruption of the advisor channels.

Flight to safety propels New York Life, others to top of annuity hill

The decline in stock prices and the boost in interest rates had consumers running to annuities in the second quarter, according to an Aug. 25 article focusing on the dynamics behind the data in LIMRA’s second quarter report, which grew to $79.4 billion, the second-highest quarter that LIMRA had recorded.

Fixed-rate deferred and registered index-linked annuities had record quarters, boosted by rising interest rates. The carriers that did particularly well were those with diversified products, such as New York Life, which vaulted to the top of sales for the quarter.

Debunking 5 in-plan annuity myths – and why that matters

In a Sept. 26 article, Phil Maffei, managing director, corporate retirement income products, TIAA, said plan participants have grown more interested in annuities since the pandemic, especially with concerns about inflation eroding retirement savings.

Maffei laid out five myths about annuities in employer plans that should be debunked. They are:
Employees are not demanding annuities yet. This is contradicted by a TIAA survey shows 72% of participants a lifetime income extremely or very valuable.

If a plan sponsor removes an annuity product, participants could lose the annuity benefits they paid for. Actually, today’s in-plan annuities have options to allow participants to move their balance or benefits.

Switching to a recordkeeper that doesn’t offer the same annuity could lose participants’ benefits. In fact, many recordkeepers are now exploring how to support these products.

Fiduciary duty requirements for annuities are unclear in comparison with traditional investments. But The SECURE Act has laid out a clear set of criteria for fiduciaries to evaluate at the time of carrier selection as well as for ongoing monitoring.

Annuities are too hard to implement. Annuities can be added to a plan in as few as five steps.

Could FIAs be a cure for dropping bond prices?

As bond yields dropped earlier this year, this April 1 article discussed if fixed index annuities could become an attractive alternative.

Rising interest rates sent bond prices lower, posting their first losses since 2013, with an expectation of softer prices for the rest of the year. This reversal could upset the traditional 60/40 investing strategy as clients and advisors look for safety. As we know from other articles in this top 10 list, consumers did indeed flock to the safety of annuities for most of the year.

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].

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Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].