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Second Quarter Annuity Sales Rebound From Prior Quarter, Remain Below 2012 Levels

Quarterly Indexed Annuities Hit Record-High $9 Billion

WINDSOR, Conn., Aug. 19, 2013 — Total annuity sales were $56.5 billion in the second quarter of 2013 — nine percent higher than the first quarter of 2013 but one percent below 2012 results, according to LIMRA's second quarter 2013 U.S. Individual Annuities Sales survey, which represents data from 95 percent of the market.

“This quarter’s results are encouraging for the annuity industry — every product line improved from the first quarter of 2013,” said Joseph Montminy, assistant vice president, LIMRA Annuity Research. “Observing the economic improvements, including interest rate increases, we believe variable annuity sales have stabilized while fixed annuity sales will continue to improve for the remainder of the year.”

In the first six months of 2013, total annuity sales were down four percent to $108.2 billion.

Variable annuity (VA) sales were one percent lower in the second quarter 2013 compared with the second quarter of 2012, totaling $38.2 billion. However, VA sales rebounded from the prior quarter, up eight percent. Year-to-date (YTD), VA sales totaled $73.7 billion, a three percent decline from the prior year.

While election rates for VA GLB riders slipped two percentage points to 82 percent in the second quarter, it still remains a significant driver of VA sales growth. GLBs were offered in 89 percent of VAs in the second quarter.

Deferred income annuities surpassed $0.5 billion for the first time, reaching $535 million in the second quarter of 2013, 155 percent higher than in the second quarter of 2012. YTD, DIA sales grew 151 percent to nearly $1 billion. DIA sales are on pace to reach $2 billion by the end of the year — doubling 2012 results.

Fixed annuity sales reached $18.3 billion in the second quarter, down one percent compared with the prior year. Yet, it is important to note that this is 13 percent higher than the first three months of the year. In the first half of 2013, fixed annuities fell six percent, totaling $34.5 billion.

For the first time ever, quarterly indexed annuities topped $9 billion. Second quarter sales were up five percent compared to last year. YTD, indexed annuities improved one percent, to reach $16.8 billion. Bank market share of indexed annuities was 12 percent in the second quarter; triple its market share of four percent in 2008.

Guaranteed lifetime withdrawal benefit (GLWB) riders continue to help propel indexed annuity sales. Indexed GLB rider election rates also hit an all-time high of 76 percent in the second quarter of 2013.

Single premium immediate annuity (SPIA) sales were flat in the second quarter of 2013 compared to one year ago, to reach to $1.9 billion. This is 12 percent higher than results in the first quarter of the year. In the first six months of 2013, SPIA sales totaled $3.6 billion, three percent lower than in 2012.

Fixed-rate deferred annuity sales declined 15 percent in the second quarter to $5.5 billion. YTD, fixed deferred are 20 percent lower than a year ago, totaling $10.7 billion.

Book-value sales were down 19 percent in the second quarter, compared with prior year, to reach $4.3 billion. MVA sales in the second quarter 2013 were $1.2 billion, equaling sales from the prior year.

A list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by second quarter 2013 sales results, as well as the second quarter Annuities Industry Estimates chart, can be found in the updated Data Bank.

LIMRA Contacts:

Catherine Theroux, 860-285-7787, ctheroux@limra.com
Mark Morris, 860-285-7875, mmorris@limra.com

About LIMRA

LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.