Most Annuity Products Had Double Digit Sales Increases in the 2nd Quarter

LIMRA’s Secure Retirement Institute recently released annuity sales data from the second quarter and entire first half of this year.  According to Insurance News Net’s “Total Annuity Sales Improve 8% In 2Q,” the annuity industry is in a good place and is likely to continue on that path for the rest of the year.  The 8% increase in total annuity sales from the second quarter of 2013 to the second quarter of 2014 is great news for the industry.  Total annuity sales were $61.4 billion in the second quarter.  This is only the second time since 2011 that quarterly sales were more than $60 billion.  Annuity sales for the first half of the year increased 10% over the first half of last year.

Fixed annuity sales really led the way for the sales increase even though interest rates were down.  Fixed annuity sales of $25.2 billion were 34% higher than they were in the second quarter of 2013.  During the first half of this year, total fixed annuity sales were $49.1 billion, which is up 39% from last year.  Fixed rate deferred annuity sales increased 30% for the second quarter and 42% for the half year.  Indexed annuities set a record for the highest sales in any one quarter with $13 billion of sales.  This was a 40% increase over last year and the first time that indexed annuity sales have ever made up more than 50% of total fixed annuity sales.  They accounted for 52% of total fixed sales.  Year to date indexed annuity sales were up 41% from last year.

These indexed annuity sales numbers were high because of new product innovation and an increase in the distribution channels.  It is likely that indexed annuity sales will top $50 billion this year as these products continue to meet consumer needs.  When guaranteed living benefits (GLB) are offered with indexed annuity products, they are added 72% of the time.  This is 4% higher than the previous quarter.

Deferred income annuity sales increased 33% over the second quarter of last year, to $710 million.  They were up 43% for the half year.  Eighty-five percent of the deferred income annuities sold were from the top 3 writers.  Sales of single premium immediate annuities increased 37% in the second quarter and matched previous record setting sales of $2.6 billion.

When it comes to variable annuity sales, they were down 5% for the quarter and 4% for the half year.  It is important to note though that there has been an exit from selling variable annuity products by many insurance companies and that others are purposefully downsizing their lines.  With that in mind, these small decreases in sales are expected.  When available, GLBs are opted for 78% of the time with variable annuity products.  Some companies are focusing on variable annuities without these guarantees to lessen their risks offering VA products.  The second quarter annuity sales results were good and the outlook for the rest of 2014 is optimistic.

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