Q3 Annuity Sales Up 9%, Led by Fixed-Rate Deferred Products

LIMRA: Quarterly Indexed Sales Set New Record at $10 Billion

WINDSOR, Conn., Nov. 21, 2013 — Fixed-rate deferred annuity sales increased 66 percent in the third quarter 2013, compared with the third quarter 2012, according to LIMRA Secure Retirement Institute (SRI). Overall, total annuity sales for the quarter increased to $59.4 billion, a 9 percent increase — the largest year-over-year growth since the second quarter 2011. For the first nine months of 2013, total annuity sales were $167.6 billion.

“In addition to the substantial growth experienced by fixed-rate deferred annuities, indexed annuities grew 15 percent in the third quarter to hit a new peak of $10 billion,” said Joseph Montminy, assistant vice president, LIMRA SRI Annuity Research. “This growth was driven by improvements in the interest rate environment, increasing demand for accumulation-type annuity products.”

Total fixed annuity sales improved 31 percent in the third quarter over the prior year to reach $23.5 billion — a level they have not reached since the third quarter 2009. Year-to-date (YTD), fixed annuity sales rose 6 percent, totaling $58.0 billion.

Fixed-rate deferred annuity sales — Book Value and MVA — were $9.5 billion, the highest quarterly total since the second quarter 2011. YTD, fixed-rate deferred annuities sales improved 5 percent.

Indexed Products Set High-Water Mark

In the third quarter, market share for fixed-rate deferred annuities rose 10 percentage points to reach 40 percent of total fixed annuity sales. For the first time, quarterly indexed annuities sales reached $10 billion — an increase of $1 billion from the prior quarter. Most of this increase over the second quarter came from accumulation-type products. YTD, indexed annuities sales increased 6 percent, to reach $26.8 billion.

“We are seeing broader acceptance of indexed annuities across the different distribution channels,” noted Montminy. Bank sales of indexed annuities expanded from 9 percent market share one year ago to 15 percent market share this quarter while independent B-D market share grew from 3 percent to 5 percent year over year.

Variable annuity (VA) sales declined 2 percent in the third quarter, to reach $35.9 billion. YTD, VA sales were $109.6 billion, falling 2 percent from the prior year.
Election rates for VA guaranteed living benefit (GLB) riders were 81 percent (when available) in the third quarter, down one percentage point from the second quarter of 2013.

Deferred income annuities (DIAs) reached $555 million in the third quarter, an increase of 106 percent compared to the prior year. In the first nine months of 2013, DIA sales grew 132 percent to $1.5 billion and are on pace to surpass $2 billion by the end of the year, which would double 2012 results.
Fixed immediate annuity sales were up 5 percent in the third quarter to reach $2.1 billion. YTD, fixed immediate annuity sales totaled $5.7 billion, matching sales from one year ago.

LIMRA’s updated Data Bank includes a list of the top 20 writers of overall total annuities, variable annuities, and fixed annuities ranked by third quarter 2013 sales results, as well as the third quarter Annuities Industry Estimates chart.
LIMRA Secure Retirement Institute’s third quarter U.S. Individual Annuities Sales Survey represents data from 95 percent of the market.