Third-quarter statistics compiled from LIMRA’s Secure Retirement Institute (SRI) underscore the rising popularity of fixed-rate deferred annuities. Sales of that particular type of annuity – both book value and MVA (market value adjusted) – hit $9.5 billion, a 66 percent leap from a year ago.
In total, Q3 annuity sales rose 9 percent to $59.4 billion, which, according to LIMRA, represents the largest year-over-year growth spurt since the second quarter of 2011. For the first nine months of 2013, total annuity sales reached $167.6 billion.
In the broad fixed annuity category, sales surged 31 percent in the third quarter from the same period a year earlier to land at $23.5 billion, a level last attained in Q3 2009. Year to date, fixed annuity sales increased 6 percent to a total of $58 billion.
Thanks in part to expansion into new distribution channels, indexed annuities had a quarterly sales total of $10 billion, notable because it’s the first time that product class has achieved that sum in a quarter.
That figure further represents a 15 percent increase from a year ago and a sales boost of $1 billion from the prior quarter. For the first nine months of the year, indexed annuity sales rose 6 percent to $26.8 billion.
Much of that increase was traced to accumulation-type products, noted Joseph Montminy, assistant vice president of LIMRA’s SRI Annuity Research, in a release. Moreover, more distribution channels now offer indexed annuities. Bank sales of indexed annuities currently constitute 15 percent of the market compared to 9 percent a year ago. Meanwhile, the market share of indexed annuity sales in the independent broker-dealer channel grew from 3 percent to 5 percent year-over-year.
DIAs hot, VAs not
Another annuity type on the rise is the deferred income annuity (DIA), a product geared toward soon-to-retire baby boomers. Though still a small portion of the entire annuity world, sales of that product class rose 106 percent year-over-year to a height of $555 million in Q3. So far this year, DIAs grew 132 percent to $1.5 billion and are on track to surpass $2 billion by the end of the year, thus doubling 2012 results.