IRI Q1 Annuity Sales Report

Fixed Annuities On The Rise

Industry wide sales sales overall total $50.5 B, up 1.2%

Market research from Beacon Research and the Insured Retirement Institute.

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final first quarter sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Industry-wide annuity sales in the first quarter of 2018 totaled $50.5 billion, a 1.2 percent increase over sales of $49.9 billion during the fourth quarter of 2017, and a 0.6% increase from sales of $50.8 billion in the first quarter of 2017.

According to Beacon Research, fixed annuity sales during the first quarter were $27.6 billion, a 6.7 percent increase over fourth quarter 2017 sales of $26.0 billion and a 0.8 percent increase from sales of $27.5 billion during the first quarter of 2017. Variable annuity total sales were $22.9 billion in the first quarter of 2018, according to Morningstar. This was a 4.2 percent decrease from sales of $23.9 billion in the prior quarter, and a 1.7 percent decline from sales of $23.3 billion in the first quarter of 2017.

Solutions You Cannot Outlive

“It’s encouraging to see annuity sales on the rise, despite recent regulatory challenges causing marketplace disruption,” said IRI President and CEO Cathy Weatherford. “IRI research shows that American consumers planning for, and living in, retirement need and desire solutions that can provide them with income they cannot outlive, and that can help protect the financial assets they’ve worked so hard to build. The insured retirement industry continues to innovate and deliver the solutions that will help millions of Americans prepare for and enjoy a secure retirement, and rising sales reflect the success of those efforts.”

According to Beacon Research, fixed indexed annuity sales also rose, by 4.6% relative to the fourth quarter of 2017, and by 12.3% over the first quarter of 2017. Overall, fixed annuity sales were comprised of approximately $15.1 billion in qualified sales and $11.1 billion in non-qualified sales during the first quarter of 2018.

“Fixed indexed sales came roaring back in the first quarter as market volatility picked up and consumers sought the relative safety and growth potential of fixed indexed annuities,” said Beacon Research CEO Jeremy Alexander. “We are seeing both increased demand for principal guarantee fixed indexed products, and a rapidly developing market for structured annuities, where downside risk is shared by the consumer and insurer. We expect this market to continue to gain strength.”

Fixed Table 1. Quarterly Fixed Annuity Sales by Product Type
Quarter Ended
($ Millions)3/31/1812/31/179/30/176/30/173/31/17
Total Sales (Rounded)26,23324,57723,34029,91026,014
Book Value5,0154,6494,4455,7335,913
Market Value Adjusted3,3382,5482,6813,2943,847
Source: Beacon Research Fixed Annuity Premium Study
Fixed Table 2. Quarterly Market Share by Product Type
(As a percent of total sales)3/31/18
Book Value19.1%
Market Value Adjusted12.7%
Source: Beacon Research Fixed Annuity Premium Study


Variable Annuities Regaining Their Footing?

According to Morningstar, variable annuity net assets fell 1.6 percent to $1.95 trillion during the first quarter of 2018, versus fourth quarter 2017 net assets of $1.99 trillion. On a year-over-year basis, assets rose 0.6 percent, from $1.94 trillion at the end of the first quarter of 2017. Net flows in variable annuities were -$18.4 billion in the first quarter. Within the variable annuity market, there were $14.5 billion in qualified sales and $8.4 billion in non-qualified sales during the first quarter of 2018, with both qualified and non-qualifies sales down versus the fourth quarter of 2017.

“Variable annuities continue to face challenges regaining their footing in the wake of transaction processing disruptions born of the past few years’ efforts to comply with the now vacated DOL fiduciary rule, coupled with increased market volatility and negative net flows putting pressure on asset values,” said John McCarthy, Senior Product Manager at Morningstar. “However, we expect sales to recover as business processes normalize and sales increase in newer product types, such as structured and fee-based annuities.”

Variable Table 1. Variable Annuity Net Assets
($ Millions)3/31/1812/31/179/30/176/30/173/31/17
Total Net Assets1,953,2311,985,7221,957,9951,976,2351,941,226
Source: Morningstar, Inc. and Insured Retirement Institute
Variable Table 2. Quarterly Variable Annuity Total Premium & Net Sales*
Quarter Ended
($ Millions)3/31/1812/31/179/30/176/30/173/31/17
Total Sales22,90423,90920,93223,68023,299
Net Sales**-18,441-18,185-15,858-14,810-17,803
Net Sales as % of total sales**-80.5%-76.1%-75.8%-62.5%-76.4%
Source: Morningstar, Inc.
*Total Premium Sales, also called Total Premium Flows, represents the sum of new sales [all first-time buyers of a contract, including inter- and intra-company exchanges] and additional premiums from existing contract owners.  Net Sales, also calledNet Flows, represents Total Premium Sales minus surrenders, withdrawals, inter- and intra-company exchanges, and benefit payments.
**Morningstar estimates net sales based on a calculation methodology used across all investment universes for which Morningstar collects and publishes asset and performance data, including global open end mutual funds, separate accounts, and exchange traded funds.
Variable Table 3. Variable Annuity Assets by Asset Class
(As a percent of total assets)3/31/18
Fixed Accounts17.4%
Money Market1.2%
Source: Morningstar, Inc.





About Morningstar, Inc.: Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of March 31, 2018. The company has operations in 27 countries.
About Beacon Research: Beacon Research is an independent research company and application service provider founded in 1997 and based in Northfield, Ill. Beacon tracks fixed and variable annuity features, rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed annuity sales at the product level, and the first to make a decade’s worth of sales information available to subscribers online at Beacon lowers compliance risk and increases fixed annuity sales with 100% carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep websites of banks, TPMs, broker-dealers and marketing organizations. Carriers and financial institutions use its systems at for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms. Directly and through licensees, Beacon information can be accessed by hundreds of financial institutions and thousands of advisors.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, broker-dealer/distributors, asset managers, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at