Except for indexed annuities and structured settlements, every major annuity product line experienced sales declines in the first quarter of 2015, as total U.S. annuity sales slipped seven percent (7%), to $54.4 billion, according to LIMRA Secure Retirement Institute.
Low interest rates, market volatility and the time-of-year all help account for the numbers. “The first quarter is traditionally a slow quarter for annuity sales. Total annuity sales have been lower in the first quarter than the prior quarter eight out of the last nine years,” said Todd Giesing, senior business analyst at the Institute, in a release.
The Institute’s first quarter U.S. Individual Annuities Sales Survey represents data from 96% of the market.
Sales of indexed annuities increased three percent (3%) in the first quarter, to $11.6 billion. It was the eighth consecutive quarter of increased sales. Indexed annuity guaranteed living benefits (GLBs) election rates crept up slightly, with 68% electing a GLB when available.
Variable annuity sales fell five percent (5%) in the first quarter, to $32.4 billion—the lowest quarterly sales for VAs since the first quarter of 2010. Eight of the top 10 companies experienced declines. “Many of the top companies are still managing sales volumes closely, focusing on diversification of their VA GLB business,” the release said.
The election rate for living benefit riders when available was 77% in the first quarter, down from a peak of 90% in the first quarter of 2012.
Low interest rates in the first quarter drove total fixed annuity sales down by eight percent (8%), to $22 billion. Sales of fixed rate deferred annuities (Book Value and MVA) fell 24% in the first quarter, to $6.4 billion.
SPIA’s sales dropped 20% for the quarter to $2.0 billion. Deferred income annuity (DIAs) sales were $560 million in the first quarter, down 10% from the first quarter of 2014. This is the lowest quarterly sales since third quarter of 2013. Sixteen carriers now offer DIAs, up from nine in 2013. Six companies now offer Qualified Longevity Annuity Contracts (QLACs), which are the DIAs designed for IRAs.
The 2015 first quarter Annuities Industry Estimates can be found in the updated Data Bank. To view the top twenty rankings of total, variable and fixed annuity writers for first quarter 2015, please visit 2015 First Quarter Annuity Rankings. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2005-2014.
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