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.
Fixed immediate annuities saw a 5 percent uptick in Q3, touching down at $2.1 billion. Year to date, fixed immediate annuity sales matched last year’s total of $5.7 billion.
Variable annuities (VAs) charted less positive results, with sales slumping 2 percent to $35.9 billion in the third quarter compared to a year ago. Year-to-date, VA sales also booked a 2 percent decline to land at $109.6 billion from $102.4 billion.
When available, election rates for VA guaranteed living riders were 81 percent in Q3, down a percentage point from the second quarter.
Jackson National, New York Life still tops
There wasn’t much change between the second and third quarter in terms of the top sellers. As it did last quarter, Jackson National Life took first place in both overall sales ($17.4 billion) and VA sales ($15.5 billion). In the fixed category, New York Life ($5 billion in sales) was No. 1 again.
Further down the list, there was a bit of jockeying among the big names. With $12.4 billion in sales, AIG leapt from third to second place in overall sales in Q3 to outpace Lincoln Financial Group. AIG moved from fifth to fourth place in the fixed annuity category, vaulting over American Equity, with $3.5 billion in sales.
Over in the variable annuity segment, Prudential Annuities fell to fourth place with $9 billion in sales. Last quarter, it took third place with $6.6 billion in VA sales. Lincoln Financial held onto the second spot in Q3 with $10.8 billion in sales, while TIAA-CREF ($9.8 billion) leapfrogged Prudential to the third place.