Annuity Sales Trends

If you watch financial news headlines you may have seen recent stories about a slump in annuity sales. However, the downturn, which many attribute to historic low interest rates, hasn’t affected all annuity products. In fact, products designed to protect against market volatility with an opportunity for slight gains in economic turmoil have favored well, according to a recent Financial Planning article. 

Compared to last year’s numbers, both fixed-rate deferred annuities, such as multi-year guaranteed annuity products, and registered index-linked annuities, sometimes called structured or buffered variable annuities, have increased in sales. Despite this, overall annuity sales fell 7% year-over-year in the third quarter as reported by LIMRA Secure Retirement Institute. 

Aside from fixed-rate deferred annuities, sales of fixed product lines have experienced a whopping 20% year-to-date drop. Similarly, traditional variable annuities have also seen double-digit declines. On the other hand, RILA sales have jumped by nearly 25% in the first 3 quarters of 2020.

“Economic conditions are very favorable for RILA products, providing investors downside protection with greater growth potential,” said Todd Giesing, SRI’s senior annuity research director. He added that accumulation-focused products are the reason for the boost, “which is marked by 30% higher volumes from the previous quarter in all distribution channels.” 

Even with the double-digit increases among MYGAs and structured VAs, Sheryl Moore, CEO of annuity research firm Wink, pointed out that sales of most of the other products are more than 10% behind the previous year’s pace. 

Jackson National Life Insurance had the highest overall annuity sales with a market share of 8.4%. Jackson’s Perspective II product was the most popular on the market for the seventh straight quarter. With a market share of 12.4% for fixed-rate deferred products and 16.5% for MYGAs, Sammons Financial Companies took second place. AIG, Lincoln Financial Group and Athene rounded out the top five issuers. 

The MassMutual Stable Voyage 3-Year was the most popular MYGA product, while three of the top 10 MYGA issuers boosted sales by more than 1,000% in the third quarter, added Moore. 

“It is very telling how consumers’ demand for guarantees continues to be emphasized through the sales of MYGA products,” Moore said.

Written by Rachel Summit

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