A Look Behind 3Q Annuity Sales Numbers

Investors prefer indexed annuity products over fixed annuities weighed down by low interest rates. This was a major factor in third-quarter fixed indexed annuity (FIA) sales rising 3 percent to $14.3 billion compared to the year-ago period, according to new market data released Thursday.

“Indexed annuities are on record pace for 2016,” said Sheryl J. Moore. “I project sales to hit $60 billion for the year.” Moore is president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales & Market Report., which tracks life and annuity sales.

FIA sales hit a record $53 billion last year. Two separate reporting agencies have projected FIA sales to reach the $60 billion range in 2016.

Allianz Life retained the crown as the top-selling FIA carrier with a third-quarter market share of 17.1 percent. Allianz 222 was the No. 1 selling indexed annuity for the ninth consecutive quarter, according to Wink.

Athene USA rose to the No. 2 spot followed by American Equity, AIG and Great American Insurance.

Third-quarter FIA sales dropped nearly 8 percent compared with the second quarter, Wink reported.

Wink: 3Q Fixed Annuity Sales Slump

Low interest rates continue to drive investors away from fixed annuity products and into indexed products as consumers look for higher yields. The Standard & Poor’s 500 index ended November up 7.6 percent.

Third-quarter sales of fixed annuities, however, slumped by nearly 59 percent to $1.2 billion compared with the year-ago period, Wink reported.

Athene USA was the No. 1 fixed annuity insurer with a market share of 31.1 percent in the third quarter. Athene was followed by Jackson National, Reliance Standard, Great American Insurance and MetLife.

Moore said that while fixed annuity sales have been “sluggish,” sales of multiyear guaranteed annuities, one of several fixed annuity product categories, are doing “fairly well.”

“Banks are driving sales of these products because rates on competing products, such as certificates of deposit, are still hovering at less than 1 percent,” Moore said in a news release. “This is driving sales of these CD-like annuities.”

LIMRA: 3Q FIA Sales Rise 5 Percent

In separate news last month, LIMRA Secure Retirement Institute reported third-quarter FIA sales rose 5 percent to $15 billion compared to the year-ago period.

LIMRA analysts also said FIA sales were heading for $60 billion in projected sales this year.

“Indexed annuities are on pace to exceed $60 billion by year-end, a 10 to 15 percent increase over prior year,” Todd Giesing, assistant research director, LIMRA Secure Retirement Institute, said in a news release.

Third-quarter year-to-date sales of FIAs soared 22 percent to $46.9 billion, compared to the year-ago period, LIMRA reported.

“While most other annuity products have faltered because of falling interest rates and anticipation of the Department of Labor fiduciary rule, FIAs continue to thrive,” Giesing also said.

The industry is looking for ways to sell FIAs by applying to the DOL for special exemptions. In the wake of Donald J. Trump’s victory in the Nov. 8 election, many industry experts are wondering whether the fiduciary rule will be delayed or even overturned. In theory, this would be  good news for sales of FIAs and variable annuities.

LIMRA: 3Q Fixed Annuity Sales Flat

FIAs continue to be the hot sellers outpacing overall fixed annuity sales. Fixed annuity sales rose only 1 percent in the third quarter to $27.7 billion compared to the year-ago period, LIMRA reported.

In the first nine months of 2016, fixed annuity sales rose 25 percent to $91.5 billion compared to the year-ago period.

Fixed annuity sales are on track to rise by an estimated 15 percent to 20 percent in 2016 compared to 2015. The robust increase in fixed annuity sales stands to offset steep declines in sales of variable annuities, LIMRA said.

Third-quarter variable annuity sales plunged 21 percent to $25.9 billion compared to the year-ago period. This marks the lowest quarterly sales level for variable annuities since 1998, according to LIMRA. Third-quarter year-to-date sales of variable annuities are off by 22 percent to $79.4 billion compared with the first nine months of 2015.

“There has been a significant drop in sales by independent broker/dealers this year as they prepare for the impending DOL rules,” Giesing said. “With so many factors still unknown, carriers have been slow to introduce new products.”

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].