LIMRA Secure Retirement Institute: Total Annuity Sales Fall Two Percent in Third Quarter

Lower Interest Rates Impact Fixed Annuity Sales

WINDSOR, Conn., Nov. 18, 2014—Total U.S. annuity sales reached $58.2 billion in the third quarter, falling two percent from the prior year.

In the first nine months of 2014, total U.S. annuity sales increased six percent, compared with 2013, to reach $177.7 billion.

“Throughout the year, fixed annuities have been the primary driver of overall annuity growth,” said Todd Giesing senior analyst, LIMRA Secure Retirement Institute Annuity Research. “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.”

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 percent increase from 2013.

Sales of fixed-rate deferred annuities (Book Value and MVA) fell 32 percent in the third quarter, compared with prior year. Fixed-rate deferred annuities reached $22.4 billion in the first nine months, an eight percent increase compared to last year.

Index annuity sales grew 15 percent in the third quarter, to $11.7 billion. YTD, indexed annuity sales grew 31 percent, totaling $36 billion.

The indexed annuity guaranteed living benefits (GLBs) election rate was 69 percent (when available) in the third quarter 2014.

Deferred income annuity (DIA) sales reached $670 million in the third quarter, 21 percent higher than prior year. In the first nine months of 2014, DIAs jumped 35 percent, totaling $2.0 billion. The top three writers continue to drive most of the DIA sales, accounting for 75 percent of third quarter DIA sales.

Single premium immediate annuity sales were up 10 percent in the third quarter to reach $2.3 billion. YTD, SPIA sales jumped 30 percent to reach $7.4 billion. LIMRA Secure Retirement Institute predicts SPIA sales will exceed current annual sales records.

Variable annuity (VA) sales fell one percent in the third quarter, totaling $35.5 billion. YTD, VAs reached $105.9 billion, a three percent 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 percent in the third quarter of 2014.

The third quarter Annuities Industry Estimates can be found in the updated Fact Tank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2004-2013.

Top twenty rankings of total, variable and fixed annuity writers can be found here.

LIMRA Secure Retirement Institute's second quarter U.S. Individual Annuities Sales Survey represents data from 94 percent of the market.

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