Fixed annuity sales have been down overall recently. This includes sales of fixed indexed annuities, but lower sales aren’t necessarily telling the whole story for fixed indexed annuity products. According to Insurance News Net’s “3Q FIA Market Share Highest In 5 Years,” Linda Koco points out that increasing market share tells a lot about the actual state of the fixed indexed annuity market. Beacon Research found that fixed indexed annuity sales accounted for 53.8% of total fixed annuity sales during the third quarter of 2014. This was the highest market share that fixed indexed annuities have seen in any third quarter since 2010.
Indexed annuity sales decreased 9.6% from the second quarter to the third quarter last year. But the sales of $11.7 billion were actually an increase of 34.5% from the third quarter two years ago. The third quarter of 2012 is the last time that the fixed indexed annuity market share was close to what it is now. Having a larger market share means something important, especially in an industry like that of fixed annuities where overall sales have declined. Fixed indexed annuity market share hit the highest level in 5 years during the 3rd quarter of 2014. When you compare the sales and market share during the 2nd quarter of 2014 and the 3rd quarter of 2013, the article says that fixed indexed annuities are holding their own despite the large fixed annuity sales decline from the 2nd to the 3rd quarters of last year. Sales and market share increased significantly from the 3rd quarter of 2013 to the 3rd quarter of 2014. This is likely because consumers appreciate the downside protection combined with upside potential offered by fixed indexed annuities.
Insurance News Net’s article includes an interesting chart that compares the different types of fixed annuity products’ market share from 2010-2014. Fixed indexed annuities and income annuities were the two products with significant increases in market share, 22.3% and 23.28% respectively. Although income annuities had a higher market share increase, their sales are still significantly lower than those of fixed indexed annuities. Increasing interest in deferred income annuities will likely lead to income annuity products taking over even more of the fixed annuity market share in the future. Market value annuity share increased by 11% overall during the five year time frame. Book value annuity market share declined by 38.1% because of the continuing low interest rate economic environment. It’s important to look at not only annuity sales, but also the market share of different types of annuities when making product comparisons.