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Retirement Planning > Retirement Investing > Annuity Investing

Annuity sales tick up in Q2

By Maria Wood

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If just viewed on an immediate quarter-over-quarter basis, annuity sales are on an upswing. However, the results remain slightly below 2012 levels, according to LIMRA.

In the second quarter, total annuity sales added up to $56.5 billion, 9 percent above the first quarter of this year, but 1 percent below the same quarter in 2012. Further, in the first half of this year, total annuity sales slipped 4 percent to $108.2 billion from $112.3 billion.

Overall, Jackson National Life remained the top seller of annuities, coming in at $11.7 billion. Lincoln Financial Group ($8.3 billion) and AIG Companies ($7.2 billion) took the number two and three spots.

Following that overall trend, total variable annuity (VA) sales were 1 percent lower in the Q2 compared to the second quarter of 2012 ($38.7 billion versus $38.2 billion). Year-to-date VA sales hit $73.7 billion, a 3 percent decline from 2012 when sales totaled $75.6 billion. Yet when compared to Q1 of this year, VA sales rose 8 percent.

Election rates for variable annuities with guaranteed living benefits (GLB) riders decreased two percentage points to 82 percent in Q2. Yet LIMRA contends those riders, which were offered in 89 percent of VAs, remain a key driver of sales growth.

The top seller in the VA space was Jackson National Life at $10.3 billion, followed by Lincoln Financial ($7.2 billion) and Prudential Annuities (6.6 billion).

DIAs, indexed annuities show strength

Deferred income annuities (DIAs) continued their sales surge, reaching $535 million in Q2, 155 percent higher than in the same quarter of last year. Year to date, DIAs sales grew 151 percent to nearly $1 billion, putting them on track to hit $2 billion in sales by year’s end.

Likewise, indexed annuity sales are on an upswing. According to LIMRA, quarterly indexed annuity sales topped $9 billion, the first time that category has reached that level. That sum is 5 percent ahead of Q2 ’12’s results, and year-to-date, indexed annuity sales rose 1 percent to $16.8 billion.

Similar to VA sales, guaranteed lifetime withdrawal benefits (GLWB) riders pushed indexed annuity sales, as indexed GLB rider election rates achieved an all-time high of 76 percent in Q2. In another indication of indexed annuities’ growing popularity, bank market share of the product class rose from 4 percent back in 2008 to 12 percent in the second quarter.

In the broad fixed annuity category, sales amounted to $18.3 billion in Q2, down a slight 1 percent from the same time last year. LIMRA points out, however, that that number is 13 percent greater than in the first three months of 2013. In the first six months of this year, fixed annuity sales totaled $34.5 billion, a 6 percent drop from the same period a year earlier.

In the fixed category, New York Life took the top spot at $2.7 billion in sales; next up were Security Benefit Life ($2.5 billion) and Allianz Life of North America ($2.4 billion).

SPIA sales flat

At $1.9 billion, single premium immediate annuity (SPIA) sales were flat in the second quarter compared to one year ago, yet were 12 percent higher than in the first quarter of this year. In the first six months of 2013, SPIA sales totaled $3.6 billion, three percent lower than in 2012.

Fixed-rate deferred annuity sales declined 15 percent in the second quarter to $5.5 billion. Year-to-date, fixed deferred sales are 20 percent lower than a year ago, totaling $10.7 billion.

Book-value sales of $4.3 billion represented a decline of 19 percent in the second quarter compared with a year prior. MVA sales in the second quarter were $1.2 billion, equaling sales from prior year.

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