Total U.S. annuity sales reached $58.2 billion in the third quarter of 2014, off 2% from the same period in 2013. In the first nine months of 2014, total U.S. annuity sales rose 6%, compared with 2013, to reach $177.7 billion.
“The 50 basis-point drop in interest rates since the start of the year has dampened interest in fixed products, pulling down third quarter sales,” explained Todd Giesing senior analyst, LIMRA Secure Retirement Institute Annuity Research, in a release.
But indexed annuities and deferred income annuities have done well.
Index annuity sales grew 15% in the third quarter, to $11.7 billion. YTD, indexed annuity sales grew 31%, totaling $36 billion. The indexed annuity guaranteed living benefits (GLBs) election rate was 69% (when available) in the third quarter 2014.
Deferred income annuity (DIA) sales reached $670 million in the third quarter, 21% higher than the prior year. In the first nine months of 2014, DIA salesjumped 35%, totaling $2.0 billion. The top three writers continue to drive most of the DIA sales, accounting for 75% of third quarter DIA sales. They are New York Life, MassMutual, and Northwestern Mutual Life.
Total fixed annuity sales were $22.7 billion in the third quarter, down five percent versus prior year. Year-to-date (YTD), fixed annuity sales reached $71.8 billion, a 21% increase from 2013.
Sales of fixed-rate deferred annuities (Book Value and MVA) fell 32% in the third quarter, compared with prior year. Fixed-rate deferred annuities reached $22.4 billion in the first nine months, an 8% increase compared to last year.
Single premium immediate annuity sales were up 10% in the third quarter to reach $2.3 billion. YTD, SPIA sales jumped 30% to reach $7.4 billion. LIMRA Secure Retirement Institute predicts SPIA sales will exceed current annual sales records.
Variable annuity (VA) sales fell 1% in the third quarter, to $35.5 billion. YTD, VAs reached $105.9 billion, a 3% drop from 2013. LIMRA Secure Retirement Institute researchers noted many of the top VA sellers are focusing on diversification of their VA GLB business. In the second quarter, a few of the top companies entered the market with accumulation-focused product without a GLB rider. Election rates for VA GLB riders, when available, were 76% in the third quarter of 2014.
The third quarter Annuities Industry Estimates can be found in the updated LIMRA Data Bank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2004-2013. LIMRA Secure Retirement Institute’s second quarter U.S. Individual Annuities Sales Survey represents data from 94% of the market.
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