WINDSOR, Conn., Nov. 16, 2022—For the second consecutive quarter, bank sales propelled fixed-rate deferred (FRD) and fixed-indexed annuity (FIA) sales to reach record levels. FRD sales in banks jumped 243% in the third quarter and bank FIA sales leapt 61%.
Overall annuity sales were $80.7 billion in the third quarter, a 29% increase from prior year results, according to LIMRA’s U.S. Individual Annuity Sales Survey. This represents the highest quarterly annuity sales results ever.
Year-to-date, total annuity sales were $223.4 billion, 17% higher than the first three quarters of 2021.
Total fixed-rate deferred annuity sales were $30 billion in the third quarter 2022, 161% above third quarter 2021 results. This is the best sales quarter for FRD products ever recorded. In the first nine months of 2022, FRD annuities totaled $74.6 billion, 77% higher than the same period last year. LIMRA expects fourth quarter FRD sales to fall below third quarter results as alternative product solutions become more competitive in an inverted yield curve environment. Still, FRD sales will close in on $100 billion in 2022, a record for annual FRD sales.
“The average fixed-rate deferred crediting rates continued to be more than triple the rates offered in bank CDs in the third quarter, which enticed bank customers to buy FRD annuities. As a result, bank FRD sales represented nearly half (49%) of the record-high fixed-rate deferred sales in the third quarter,” said Todd Giesing, assistant vice president, LIMRA Annuity Research.”
Third quarter fixed indexed annuity (FIA) sales were a record $21.5 billion, a 26% increase from prior year. Bank sales also played a role in the record FIA sales, holding 20% market share in the quarter. In comparison, FIA bank sales represented 16% of the FIA market in third quarter 2021. Year-to-date (YTD), FIA sales were $57.5 billion, 22% higher than last year.
“Under the current economic environment, FIAs are very attractive to investors seeking principal protection with potential investment growth opportunity,” noted Giesing. “Rising interest rates have increased the returns on fixed accounts while enabling insurers to offer attractive cap rates on the S&P 500. With long-term economic forecasts unexpected to change significantly, LIMRA is forecasting FIA sales will break annual records, totaling as much as $76 billion in 2022, and increasing each year through 2026.”
Registered index-linked annuity (RILA) sales totaled $10.6 billion in the third quarter, up 14% from prior year. In the first nine months of 2022, RILA sales were $31 billion, 9% higher than prior year. LIMRA is forecasting modest growth in 2022, compared with the 30% plus annual growth experienced over the past three years. In 2022, LIMRA projects RILA sales to be between $38 and $42 billion.
Traditional variable annuity (VA) sales continued to drop. Third quarter traditional VA sales fell 34% to $14.1 billion. This is the third consecutive quarter of double-digit declines and the lowest quarterly results since the third quarter of 1995. YTD, traditional VA sales were $49.1 billion, down 24%. To put these results into perspective, annual traditional VA sales peaked at $184 billion in 2007. In 2022, LIMRA projects traditional VA sales to be a third of that, tallying under $65 billion.
Income annuities have rebounded to pre-pandemic levels due to rising interest rates. Single premium immediate annuity (SPIA) sales were $2.5 billion in the third quarter, a 58% year-over-year increase. YTD, SPIA sales were $6 billion, 28% higher than the same period last year.
Deferred income annuity (DIA) sales did not fare as well. In the third quarter, DIA sales fell 1% to $505 million. YTD, DIA sales were $1.4 billion, 4% lower than prior year.
Overall, LIMRA is forecasting income annuity sales to grow more than 10% in 2022 with steady growth projected through 2026.
More details on the sales results can be found at Third Quarter 2022 Annuities Industry Estimates in LIMRA’s Fact Tank.
Third quarter 2022 annuities industry results are based on LIMRA’s quarterly annuity sales survey, which represents 89% of the total market.
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