2019 fixed indexed annuity sales break all-time record thanks to strong performance in the first half of the yearNew research from the Secure Retirement Institute reveals the sustained effect of the low interest environment
WINDSOR, Conn., Feb. 18, 2020—Total annuity sales were $241.7 billion in 2019, an increase of 3% over 2018 results, according to the Secure Retirement Institute® (SRITM) Fourth Quarter U.S. Annuity Sales Survey. This represents the highest annual annuity sales recorded since 2008.
Total annuity sales were $57.6 billion in the fourth quarter, down 8% compared with fourth quarter 2018.
“Fixed annuity sales have driven the overall growth for the annuity market over the past four years,” said Todd Giesing, director, Annuity Research, SRI (formerly LIMRA SRI). “Falling interest rates in the third quarter dampened fixed product sales in the second half of the year. As a result, most fixed products experienced declines in the fourth quarter, pulling down total annuity sales results for the quarter.”
In 2019, fixed annuities represented 58% of the total annuity market.
Fixed Annuity Sales Reach Record Levels Driven by Indexed Annuities
While fixed annuity sales dropped in the fourth quarter (down 18% to $30.8 billion), robust sales in the first half of 2019 boosted annual fixed annuity sales to exceed its previous sales record of $133.5 billion. In 2019, total fixed sales were $139.8 billion, up 5% from prior year.
“Much of the overall growth in the fixed market can be attributed to the continued growth in the fixed indexed annuity market (FIA),” noted Giesing. “FIA sales have increased 11 of the past 12 years, accounting for more than half of the fixed annuity market sales.”
- For the year, FIA sales were $73.5 billion, up 6% from 2018 results. This surpasses the sales record for FIA sales set in 2018.
- In the fourth quarter, FIA sales were $16.9 billion, down 13% from prior year’s results. SRI researchers point to low interest rates and increased interest in registered index-linked annuities, which offer a similar value proposition.
- Fee-based indexed annuity sales continue to fall. In the fourth quarter, fee-based FIA sales were $140 million, down 17% from prior year. Fee-based products represent less than 1% of the total FIA market.
- Fixed-rate deferred annuity sales dropped 29% in the fourth quarter to $9.4 billion. Again, a strong first half of the year balanced the declines of the fourth quarter. At year end, fixed-rate deferred annuity sales totaled $47.5 billion, up 4% from last year. This is the highest level of fixed rate deferred sales since the financial crisis.
- Fourth quarter single premium income annuity sales fell to $2.1 billion, 22% lower from prior year results. Despite the quarterly decline, SPIA sales beat previous the sales record set in 2018. SPIA sales were $9.9 billion in 2019, up 2% from 2018.
- Deferred income annuity sales sunk 20% in the fourth quarter, to $527 million. For the year, DIA sales totaled $2.5 billion, up 8% from prior year.
Registered Index-Linked Annuities Propel Variable Annuity Growth for the Quarter and the Year
For the third consecutive quarter, variable annuity (VA) sales recorded positive growth. VA sales were $26.8 billion in the fourth quarter, up 8%, compared to prior year. VA sales were $101.9 billion for the year, an increase of 2% from 2018. This is the second consecutive year of annual growth.
Growth in the VA market was driven by registered index-linked annuity products (RILA). In the fourth quarter, RILA sales were $4.9 billion, 39% higher than prior year results.
“The impact of RILA sales on the overall VA market is significant. When you look at VA sales excluding RILAs, VA sales dropped 5% in 2019, compared to the 8% increase recorded with RILAs included,” noted Giesing. “One of the things that is driving the growth in the RILA market is GLB riders. More than $400 million of fourth quarter RILA sales were with GLB riders, representing 8% of the total RILA market.”
- In 2019, RILA sales were $17.4 billion, up 55%. RILA sales represent 17% of the VA market. To demonstrate the impact RILAs are having — VA sales excluding RILAs fell 5%.
- Fee-based VA sales were $850 million in the fourth quarter, 5% higher than prior year. This matches the record sales experienced in the second quarter 2018. For the year, fee-based VAs totaled $3.0 billion, which is 5% lower than 2018 results. Fee-based VAs represent 3% of the total VA market.
The fourth quarter 2019 Annuities Industry Estimates can be found in LIMRA’s Fact Tank (choose 2019, 4Q).
The top 20 rankings of total, variable and fixed annuity writers for 2019 will be available around March 17, following the last of the earnings calls for the participating carriers.
Secure Retirement Institute’s Fourth Quarter U.S. Individual Annuities Sales Survey represents data from 94% of the market.
About Secure Retirement Institute®
The Secure Retirement Institute® (SRITM) provides comprehensive, unbiased research and education about all aspects of the retirement industry to improve retirement readiness and promote retirement security. For information on the Secure Retirement Institute, visit: www.limra.com/sri.