After record breaking sales in 2022, Q1 annuity sales for 2023 hit $92.9 billion, a 47% increase. Information from InsuranceNewsNet confirms that this is the highest quarterly sales ever recorded with results from LIMRA’s Preliminary U.S. Individual Annuity Sales Survey.
“Market conditions continue to drive investor demand for annuities. Every major fixed annuity product line experienced at least double-digit, year-over-year (YOY) growth,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Despite expectations that interest rates will level off, LIMRA is forecasting total annuity sales in 2023 to exceed $300 billion for the second consecutive year.”
Increases in sales are everywhere as fixed-rate deferred (FRD) annuity sales were $40.9 billion in the first quarter, which is 157% higher than the first quarter of 2022. FRD sales used to make up about 18% of the market in 2020, and are now making up a stunning 44% of the total annuity market.
“On average, FRD annuity crediting rates continue to outperform CD rates, making these products very attractive to conservative investors,” said Giesing. “LIMRA anticipates FRD products to have strong sales this year even though interest rates are expected to fall in the second half of 2023. While we don’t expect FRD sales to match the record set in 2022, LIMRA is forecasting sales to be above $100 billion in 2023.”
Fixed-indexed annuity (FIA) sales also hit the ground running with a record-breaking quarter. Total sales were $23.1 billion, this is up 42% and 4% higher than the record set previously in 2022 in the fourth quarter. “Economic conditions remain favorable for FIA products and this is forecasted to continue throughout the year,” said Giesing.
More records soar as the income annuity market made its highest quarterly sales ever, topping $4.1 billion. Single-premium immediate annuity sales were $3.3 billion in the first quarter, 120% higher than prior year. Deferred-income annuity sales have risen 125% YOY to $820 million in the first quarter.
LIMRA has expectations of strong sales in the first half of the year and sees the growth to be at least 15% in 2023. This is all while investors are looking to lock in favorable payout rates before they begin to fall.
On a different note, traditional variable annuity (VA) sales are coasting to a slow down. VA sales were $12.9 billion in the first quarter, and deflated 30% from the first quarter of 2022. LIMRA is predicting sales growth in this category to be flat in 2023, as market volatility is expected to carry on.
Registered index-linked annuity (RILA) sales totaled $10.4 billion in the first quarter of 2023, up 8% from 2022. These will keep on attracting investors who are searching for a greater return as well as willing to accept some of the disadvantages. LIMRA forecasts RILA sales to blow up in 2023, likely growing at least 10%.
These preliminary first quarter annuity industry estimates for 2023 are based on monthly reporting, and a reflection of 83% of the total market. First quarter totals of 2023, and top 20 rankings of variable and fixed annuity writers will be at hand in mid-May.