LIMRA: Annuity Sales Decline In First Quarter

News release from LIMRA

WINDSOR, Conn., May 19, 2015—Total U.S. annuity sales dropped 7 percent in the first quarter, totaling $54.4 billion.  Every major product line except indexed annuities and structured settlements experienced declines in the first quarter.

“Persistent low interest rates and market volatility in the first quarter had an impact on all product lines,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Research.  “However, there may be a seasonal component to it as well.  Our research shows the first quarter is traditionally a slow quarter for annuity sales.  Total annuity sales have been lower in the first quarter than the prior quarter eight out of the last nine years.”

Variable annuity sales fell 5 percent in the first quarter, to $32.4 billion.  The declines were felt broadly with 8 of the top 10 companies experiencing declines. This represents the lowest quarterly sales for VAs since the first quarter of 2010.

“Many of the top companies are still managing sales volumes closely, focusing on diversification of their VA GLB business,” noted Giesing.

The election rate for GLB riders when available was 77 percent in the first quarter, which is down from a record high of 90 percent back in the first quarter 2012.

Declining interest rates in the first quarter drove total fixed annuity sales to fall 8 percent, to $22 billion.

Sales of fixed rate deferred annuities (Book Value and MVA) dropped 24 percent in the first quarter, totaling $6.4 billion.

Indexed annuities increased 3 percent in the first quarter to $11.6 billion. This is the eighth consecutive quarter of increased sales. Indexed annuity guaranteed living benefits (GLBs) election rates crept up slightly, with 68 percent electing a GLB when available.

SPIA’s sales dropped 20 percent for the quarter to $2.0 billion.

Deferred income annuity (DIAs) sales were $560 million in the first quarter, down 10 percent from the first quarter of 2014. This is the lowest quarterly sales since third quarter of 2013.  LIMRA Secure Retirement Institute reports there are now 16 carriers offering DIAs, up from nine in 2013.   In addition, there are six companies are now offering QLAC.

The 2015 first quarter 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 first quarter 2015, please visit 2015 First Quarter Annuity Rankings. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2005-2014.

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