In Linda Koco’s Annuity News summary of 2013 annuity sales, she likens them to a weather report. “Annuity Sales in 2013: Sunny With A Bit Of Haze” discusses the high points for annuity sales in 2013 and says that the low points weren’t too low. The highlight, as I’ve written about before in this blog, was the deferred income annuity. While this newer annuity product doesn’t make up a big portion of total annuity sales, its sales increases were astronomical. 2013 DIA sales of $2.2 billion were a 113% increase from 2012 sales of $1.1 billion. Another notable mention is that deferred income annuities were not even a separate line item in annuity reports in 2012. This huge jump in sales proves their increasing popularity. These annuity sales results come from the LIMRA Secure Retirement Institute sales report. Total annuity sales increased and the industry also had the biggest quarter to quarter sales increase that it has seen in the past 11 years.
Total fixed annuity sales were up 17% for the year. This is largely because of the increasing popularity and sales of fixed indexed annuities. FIAs made up almost half of the $85 billion in fixed annuity sales. Fixed indexed annuity sales increased 16%, from $33.9 billion in 2012 to $40 billion in 2013. Fourth quarter sales increased 40% year over year. Better interest rates were one factor contributing to this growth. But an increase in sales through the banking and broker/dealer channels helped as well. These increases did not take away from independent channel sales; they just added to FIA sales growth. When looking at a chart of fixed indexed annuity sales from 2009-2013, sales increased each year. This is especially important since these weren’t all great years for the financial industry overall.
Variable annuity sales were down this year, but this isn’t really bad news. With so many companies exiting the variable annuity market and trying to buyback old VA guarantees, a sales decline of 1% is much better than most people anticipated. Sales went from $147.4 billion in 2012 to $145.3 billion in 2013. Fourth quarter sales actually increased 4% year over year. Looking at the five year variable annuity sales chart from 2009-2013, you can see that sales are still up significantly overall from 2009. The sales high in 2011 is what caused many insurance companies to start backing down from variable annuity sales. Companies selling variable annuities now are working hard to balance customer needs with company needs and offer fair guarantees. A new trend within the variable annuity product line is more products focused on tax-deferred growth through alternative investment choices.
The total annuity sales in 2013 were $230.1 billion. The 10-year high of $265 billion occurred in 2008, while the 10-year low of $217 billion was back in 2005. Last year’s sales were up 6% from the 10-year low and down 13% from the 10-year high. Annuity sales increased 5% from 2012 to 2013. The LIMRA Secure Retirement Institute has some great graphs and charts in their sales report. Increasing overall annuity sales, an increase in fixed annuity sales, and a nearly flat sales year for variable annuities meant a good 2013 for the industry.
Written by Rachel Summit