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

The macroeconomic factors dominating 2022 are about as dramatic as it gets: 8-9% inflation rate, interest rates up 2% and the Dow Jones down 10%.

To annuity buyers and sellers, it signals one thing: a flight to safety. In other words, a turn away from riskier, equity linked products toward safer, guaranteed rate return products such as fixed annuities.

Carriers who have the right mix of products, distribution and financial rating capitalized on the sudden buying shift. New York Life is one of those companies, vaulting to No. 1 in sales for the second quarter, according to LIMRA's U.S. Individual Annuity Sales Survey.

New York Life tallied $11.2 billion in annuity sales for the first half of 2022, outpacing No. 2 AIG with $9.7 billion. The bulk of those sales were fixed annuities, where New York Life also ranked No. 1 with $8.7 billion.

Total U.S. annuity sales increased 16% to $79.4 billion in the second quarter, according to LIMRA.

New York Life recently appointed Senior Vice President Todd Taylor as head of retail annuities. Taylor pointed to the insurer's strong distribution system, which includes a career agency, strong broker-dealer network and partnership with Fidelity Investments, as driving its strong annuity sales.

Likewise, a triple A financial strength rating is a boost in a shaky economy, he added.

"Broker-dealers take account for that triple A in who they allow on the platform," Taylor explained. "So in several cases, we are on a narrower shelf, where the broker-dealer is saying we only want to work with the highest quality insurers."

Big BD sales numbers

Fixed-rate deferred annuity sales led the way with a total of $28.7 billion in the second quarter, 79% higher than second quarter 2021 sales. In the first six months of 2022, fixed-rate deferred annuities totaled $44.6 billion, a 46% increase compared with the same period last year.

“Overall, banks and the full-service national broker dealers are driving this record-setting growth,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Second quarter overall annuity sales through banks grew 48% and sales through full-service national broker dealers were up 55% for the quarter.

New York Life was not the only big seller in the second quarter. MassMutual came in second with $8.3 billion in overall sales, also driven by fixed-rate deferred sales.

Phil Michalowski, head of annuities with MassMutual, echoed the notion that consumers are fleeing for the safety of solid fixed annuity product, with durations as short as three years.

"Credited rates on 3-year durations have surpassed 3%, which is a key threshold that tends to drive higher demand," Michalowski said.

Diversification key

New York Life is also a top ten seller of variable annuities. Although traditional VAs have been in decline, registered indexed-linked annuity products are providing a spark.

RILA sales saw the highest quarter ever in the second quarter, up 8% to $10.8 billion, LIMRA reported. In the first half of 2022, RILA sales were $20.4 billion, 6% higher than prior year. RILA sales now make up 40% of overall variable annuity sales.

Traditional VA sales fell again in the second quarter by 27% to $16.5 billion, the lowest quarterly results since the fourth quarter of 1995. For the year, VA sales are down 20%.

Still, “when you look at the carriers that fared well in the quarter and in the first half of 2022, those with a diversified suite of annuity product offerings were most successful,” Giesing said.

New York Life just launched its first fee-based VA called Premier Advisory Variable Annuity and sales are strong, while still a small piece of the overall pie, Taylor said.

"While I think the jury is still out on the long-term success of those products, we're seeing a lot of success in our captive channel by offering folks that option, so that's something that sort of near and dear to my heart," he said.

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.

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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.