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Strong Year-End Annuity Sales Suggest Promise in 2019


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The final 2018 market data for the U.S. annuity industry was recently released showing record quarterly highs for both fixed index annuity sales and variable annuity assets. According to a recent InsuranceNewsNet article, highlights from the data include:

Total Annuity Sales

  • Industry-wide annuity sales in the third quarter of 2018: $54.9 billion
  • 2.0% decrease from sales of $56 billion during the second quarter of 2018
  • 20% higher versus third quarter of 2017 sales of $45.8 billion
  • $159.3 billion – year to date total annuity sales
  • 7.1% increase versus 2017 third quarter year-to-date sales of $148.8 billion

Fixed Annuity Sales

  • $31.8 billion – 2018 third quarter fixed annuity sales
  • Virtually flat compared to second quarter
  • 40.9% higher versus 2017 third quarter sales of $22.6 billion

Variable Annuity Sales

  • $23 billion – 2018 third quarter variable annuity total sales
  • Down 4.4% versus 2017 second quarter sales of $24.1 billion
  • 10.1% higher versus 2017 third quarter VA sales of $20.9 billion

“While sales dipped a bit in the third quarter, we believe annuity sales will continue to improve given the reduction in disruption and uncertainty following the demise of the DOL fiduciary rule last spring,” siad IRI President and CEO Cathy Weatherford. “We expect fourth-quarter sales to remain strong and continue into 2019. Variable annuities also should rebound as Americans perceive a greater need for solutions to protect their investable assets and retirement income from market volatility.”

Beacon Research reported that fixed annuity sales were robust across all product types.

  • $18 billion – Record sales for fixed indexed annuities reached in 2018 third quarter.
  • 2.1% increase versus 2018 second quarter sales of $17.6 billion
  • 38.7% higher versus 2017 third quarter sales of $13.0 billion
  • $7 billion – Book value annuities sales were virtually flat in 2018 third quarter.
  • 2018 third quarter sales 56.4% higher versus 2017 third quarter sales of $4.4 billion
  • $4.1 billion – Market value adjusted (MVA) annuities sales
  • Down 4.3% versus 2018 second quarter sales of $4.3 billion
  • 53.3% higher than third quarter 2017 sales of $2.7 billion
  • $2.7 billion – Income annuity sales fell
  • 5.8% decrease versus 2018 second quarter income annuity sales of $2.9 billion
  • 11.3% higher versus 2017 third quarter income annuity sales of $2.5 billion

Fixed Index annuities continue to lead the charge, reaching yet another record levels in the third quarter,” said Jeremy Alexander, CEO Beacon Research, “and we expect all fixed annuity product types to continue showing robust growth in 2019 in an investment environment that is likely to be marked by higher interest rates and increased market volatility.”

According to Morningstar, variable annuity net assets rose in the third quarter as the bull market in equities continued to drive higher valuations in sub-account assets.

  • $2 trillion – 2018 third quarter variable annuity assets grew 1.9% versus 2018 second quarter assets of $1.67 trillion
  • 2.4% higher versus 2017 third quarter variable annuity assets of $1.96 trillion

During the third quarter of 2018, there were $14.9 billion in qualified sales and $8.1 billion in non-qualified sales within the variable annuity market. Qualified sales fell 3.7% from second quarter qualified sales of $15.5 billion. On the other hand, non-qualified variable annuities were down 5.5% from second quarter non-qualified sales of $8.6 billion.

“Strong market performance pushed assets under management past $2 trillion, reaching a new all-time high,” said Michael Manetta, Senior Quantitative Analyst at Morningstar. “And while we still see weakness in VA sales, levels are recovering from record lows reached last year, and sales should continue to improve in 2019 as rising interest rates have a positive effect on lifetime income benefit features and insurer risk capacity.”

Written by Rachel Summit

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