According to the Chinese calendar, 2013 was the Year of the Snake. But the investment and insurance community may well look back on it as the Year of the Annuity.
Fresh sales data from Beacon Research and the Insured Retirement Institute (IRI) document an annuity sales boom, at least through the first three quarters of last year. Industry-wide annuity sales for the third quarter of 2013 reached a two-year high of $57.5 billion, according to IRI, led by fixed annuities, sales of which grew 50 percent from the first quarter to the third quarter of last year, during which they recorded their highest sales levels since 2009. The surge on the fixed side more than offset a 6 percent drop in variable annuity sales from the second quarter of 2013 to the third ($35.1 billion compared to $37.3 billion).
Products in the fixed annuity class gained appeal largely thanks to an increase in the 10-year constant Treasury maturity rate, which, according to IRI, led to higher payout amounts on immediate and deferred income annuities, along with higher crediting rates on fixed deferred annuities, and higher caps and participation rates on fixed indexed annuities.