2Q FIA Sales Shatter Quarterly All-Time Record

WINDSOR, Conn., Aug. 16, 2016—According to LIMRA Secure Retirement Institute’s Second Quarter U.S. Annuity Sales survey, fixed indexed annuity sales were $16.2 billion, 30 percent higher than prior year and surpassing prior quarterly sales records.

“The decline in interest rates benefitted indexed annuity sales once again as consumers seek out ‘safe yield’,” said Todd Giesing, assistant research director, LIMRA Secure Retirement Institute.  “The indexed market is extremely competitive at this time as indexed products remain an attractive alternative to variable annuity (VA) products. This has been beneficial for independent broker-dealers, and in fact, we expect this channel to post record indexed annuity sales this year.”

In the first half of the year, indexed annuity sales increased 32 percent to $31.9 billion, compared with the first six months of 2015.  As reported earlier this month, the Institute expects indexed annuity sales to exceed $60 billion by the end of the year.

Other fixed annuity sales continued to see strong sales growth in the first half of 2016. Sales of fixed-rate deferred annuities, (Book Value and MVA) improved 46 percent in the second quarter to $10.5 billion.  Year-to-date, fixed rate deferred annuity sales were $22.5 billion, which is 67 percent higher than prior year.

Second quarter fixed immediate annuity sales totaled $2.5 billion, 14 percent more than prior year. In the first half of 2016, immediate annuity sales increased 19 percent to $5 billion.  Many of the top companies have put more of an emphasis on their income annuity sales, with seven of the top ten writers experienced growth of 25 percent or higher.  The Institute forecasts fixed immediate annuity sales will exceed $10 billion in 2016, 10-15 percent higher than 2015 totals.

In the second quarter, deferred income annuity (DIA) sales jumped 43 percent in the second quarter, to $870 million.  This is the highest quarterly sales total for DIA products since the Institute started reporting DIA sales results.  Nine of the top ten writers experienced growth of 25 percent or more.  In the first half of 2016, DIA sales rose 37 percent to $1.6 billion.  Institute analysts expect DIA sales to have an upward trajectory in the second half of the year driving DIAs to a record sales year in 2016, exceeding $3 billion.

Overall, sales of fixed annuities jumped 32 percent in the second quarter, to $31.5 billion.  Year-to-date, fixed annuity sales totaled $63.8 billion, an increase of 39 percent compared with the same period in 2015.

Despite the fact that sales in all retail fixed product lines recorded double-digit growth, the drop in VA sales pulled the overall results down. In second quarter 2016, total U.S. annuity sales were $58.4 billion, 3 percent lower than the prior year.

In the second quarter, VA sales totaled $26.9 billion, down 25 percent.  VA sales fell 22 percent in the first 6 months of 2016 to $53.5 billion.  This is lowest first half of the year for VA sales since 1998 and the first time VA sales have been below $30 billion for two consecutive quarters since 2002.

“Low interest rates and a focus on implementing the DOL fiduciary rule have hampered product innovation, which we usually see strong activity in the second quarter,” noted Giesing.

The Institute forecasts VA sales to drop 15-20 percent in 2016 and another 25-30 percent drop in 2017 when the DOL fiduciary rule goes into effect. The drop in VA sales in 2016 is expected to be offset by growth in the fixed annuity market and total annuity sales should be in line with 2015’s results.

The second quarter 2016 Annuities Industry Estimates can be found in the updated Data Bank. To view the top twenty rankings of total, variable and fixed annuity writers for second quarter 2016, please visit Second Quarter 2016 Annuity Rankings. To view the breakout of indexed and fixed-rate annuity sales rankings, please visit: Second Quarter Fixed Annuity Breakout Rankings To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2006-2015.

LIMRA Secure Retirement Institute's second quarter U.S. Individual Annuities Sales Survey represents data from 96 percent of the market.