The annuity industry received some much-welcomed news: Sales are surging. According to a report issued today by the Insured Retirement Institute, industry-wide annuity sales reached $57.5 billion during the third quarter of 2013, a 5.5 percent increase from the previous quarter and an 8.7 percent increase from third quarter 2012.
Fixed annuity sales, specifically, rose 31 percent in the second quarter of 2013, from $17.1 billion to $22.5 billion. Variable annuity sales, on the other hand, were down 5.9 percent during the third quarter 2013, to $35.1 billion.
“Industry-wide annuity sales are at their highest mark in two years,” said Cathy Weatherford, IRI president and CEO. “Strong sales were supported by a surge in sales of fixed annuities. From the first quarter to the third quarter, we’ve seen fixed annuity sales rise 50 percent. During this time, interest rates have increased steadily. As a result of this more favorable environment, demand for lifetime income has gone from sustaining sales to driving measurable growth across the industry.”
The report, which was based on data supplied by Morningstar Inc. and Beacon Research, states that fixed annuity sales reached their highest point since 2009 due to strong sales of all product types.
“Fixed annuity sales growth during third quarter was attributable largely to some of the highest interest rates and spreads we’ve seen in more than a year,” said Beacon Research President Jeremy Alexander. “The one-year versus 10-year Treasury rate spread increased more than 100 basis points since the end of 2012, and credit spreads are rising, which enabled carriers to raise the credited rates on their products.”