LIMRA Secure Retirement Institute: Total Annuity Sales Increase by 11 Percent in First Quarter
WINDSOR, Conn., May 21, 2014 — Total
annuity sales improved 11 percent in the first quarter of 2014,
compared to the first quarter of 2013, totaling $57.7 billion
according to the LIMRA Secure Retirement Institute.
Annuity sales were driven largely by
fixed annuity sales, which experienced a 43 percent increase in the
first quarter, compared to prior year, reaching $23.5
"Despite recent declines in interest
rates - falling from just over 3 percent at the end of 2013 to 2.7
percent at the end of the first quarter- we are still predicting
approximately 10 percent growth for fixed annuities in 2014," said
Todd Giesing, senior analyst, LIMRA Secure Retirement Institute Annuity Research.
Fixed-rate deferred annuities - Book
Value and MVA - had another robust quarter, increasing 48 percent
in the first quarter to reach $8 billion.
Indexed annuity sales rose 43
percent in the first quarter, totaling $11.3
billion. Product innovation has played
an important role in growing the indexed annuity market -
especially in new distribution channels. More companies are
introducing uncapped crediting strategies that utilize
volatility-controlled indices to manage the risk.
First quarter indexed annuity sales
through the bank and independent broker-dealer (IBD) channels
reported significant growth. In the first quarter of 2013,
IBDs represented just 3 percent of the indexed annuity
market. As of first quarter 2014, IBDs represent 13 percent
of the market. Banks also saw substantial growth from 10
percent of the market in first quarter 2013 to 16 percent in the
first quarter of this year.
"The increases in the banks and IBD
channel are encouraging because
they represent organic growth" noted Giesing.
"Traditionally, independent agents have represented most of the
indexed annuity sales. Recent sales growth in the bank and
IBD channels has not detracted from the independent agent channel,
which increased 15 percent in the first quarter."
Indexed annuity guaranteed living
benefits (GLBs) election rates were 68 percent (when available) in
the first quarter.
Deferred income annuities (DIA)
reached $620 million in the first quarter, 57 percent higher than
prior year. Yet, compared to fourth quarter 2013
sales, DIA sales were down 13 percent, representing the first
quarter over quarter decline for DIA products since LIMRA Secure Retirement Institute began
tracking them. With five additional companies entering the
DIA market in 2013 and more expected in 2014, LIMRA Secure Retirement Institute expects DIA
market to continue to experience strong growth over the next
Single premium immediate annuity
sales improved 47 percent in the first quarter to reach $2.5
VA sales fell 3 percent in the first
quarter, to $34.2 billion. This is the lowest level VA sales
have been in first quarter 2010.
LIMRA Secure Retirement Institute has noted a shift in the
annuity market: In the first quarter of 2013, VA sales
represented 68 percent of the total market share. A year
later, VA sales only made up 59 percent of the total market.
Election rates for GLB riders were
elected 79 percent (when available) in the first quarter. Increased
focus on accumulation and tax deferral, as well as changes in GLB
riders has impacted election rates of these riders.
The first quarter Annuities Industry Estimates can be found in the updated Data Bank. To view variable,
fixed and total annuity sales over the past 10 years, please visit
Annuity Sales 2004-2013. The 2014 top 20 rankings of total, variable and
fixed annuity writers can be viewed at 2014 Top 20 Annuity
LIMRA Secure Retirement Institute's
fourth quarter U.S. Individual Annuities Sales Survey represents
data from 95 percent of the market.
Catherine Theroux, 860-285-7787, firstname.lastname@example.org
Mark Morris, 860-285-7875, email@example.com
About LIMRA Secure Retirement
LIMRA Secure Retirement Institute provides comprehensive, unbiased
research and education about all aspects within the retirement
industry to improve retirement readiness and promote retirement
security. For more information, please visit www.secureretirementinstitute.com