U.S. Annuities Thrive Amid Turbulent Times

Advisors and clients flock to annuities for downside protection

The new Cerulli Report, U.S. Annuity Markets 2022: Acclimating to Industry Trends and Changing Demand, examines the retail annuity industry, emphasizing annuity distribution, product development, product positioning, and asset management. Perspective is offered from multiple points of view, including investors, advisors, insurance companies, variable annuity (VA) sales professionals, and asset managers. Access the full report here.

November 17, 2022, BOSTON—Annuity sales have been on a tear in 2022, largely due to Federal Reserve interest rate hikes, which have allowed insurers to raise crediting rates on their fixed and indexed annuities. The rate environment, coupled with difficult market and economic conditions, have led to many advisors, and their clients, flocking to annuities for safety, according to The Cerulli Report—U.S. Annuity Markets 2022: Acclimating to Industry Trends and Changing Demand.

Cerulli believes that if the Fed continues raising interest rates, sales of fixed-rate deferred annuities will increase their hot streak. A declining stock market would only add to that momentum because advisors who embrace annuities will continue to seek the safety of fixed annuities. “Insurers may be able to leverage the current market conditions to continue reminding advisors of the cost-benefit of many annuities and specific features, including principal protection, income-taking solutions, long-term care hybrids, in-plan annuities, and inflation -protection features,” says senior director, Donnie Ethier. “However, it will take time to do so.”

At the same time, while annuities may flourish in the near term, Cerulli cautions insurers to avoid a rate war that could negatively impact individual issuers and potentially the perception of the industry. “Carriers will need to manage client expectations as far as the kind of returns they will ultimately achieve,” says Ethier. “While 2022 conditions have boosted overall annuity sales, the trends that have been in motion for a over a decade will likely return when markets stabilize. This means, despite renewed interest in the solutions and increasing sales, the challenges that insurers were facing prior to 2022 will persist,” he concludes.




About Cerulli Associates
For over 30 years, Cerulli has provided global asset and wealth management firms with unmatched, actionable insights.
Headquartered in Boston with fully staffed offices in London and Singapore, Cerulli Associates is a global research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.


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