The Insured Retirement Institute (IRI) today announced final second-quarter 2014 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Reaching the highest mark in three years, industry-wide annuity sales in the second quarter of 2014 rose to $59.9 billion, a 6.8 percent increase from $56.1 billion in the previous quarter and a 9.9 percent increase from $54.5 billion in the second quarter of 2013.
Fixed annuity sales – supported by record fixed indexed annuity sales – increased to $24.3 billion in the second quarter of 2014, according to Beacon Research. This was a 7.6 percent increase from $22.6 billion in the previous quarter and a 41.6 percent increase from $17.1 billion in the second quarter of 2013. Variable annuity total sales reached $35.6 billion in the second quarter of 2014, according to Morningstar. This was a 6.2 percent increase from $33.5 billion in the first quarter of 2014, but a 4.6 percent decline from $37.3 billion in the second quarter of 2013.
These are the highest industry-wide sales we’ve seen in three years, and on the fixed side of the market, the highest in five years. We continue to see moderate growth, driven by consumer need for protection and income, in all types of retirement income products, and more robust growth in certain products based on the macroeconomic conditions of the day. For example, the market is currently experiencing a surge in the sale of fixed indexed annuities that – in addition to offering upside potential with downside protection and access to guaranteed lifetime income – can be used by consumers as an alternative to traditional fixed income investments without the interest rate risk.
According to Beacon Research, continued growth in fixed annuity sales were largely supported by a surge in fixed indexed annuity sales, which hit a new quarterly record of $12.9 billion in the second quarter of 2014. This represents a 14.8 percent increase from first-quarter 2014 sales of $11.2 billion and a 41.5 percent increase from second-quarter 2013 sales of $9.1 billion. Income annuity sales also rose during the second quarter of 2014, topping $3.39 billion – a 3.2 percent increase from nearly $3.29 billion in the previous quarter and a 32.7 percent jump from $2.56 billion in the second quarter of 2013. For the entire fixed annuity market, there were approximately $12.5 billion in qualified sales and $11.8 billion in non-qualified sales during the second quarter of 2014.
“We are enjoying a prolonged resurgence of fixed annuity sales of all types, with sales up $7.1 billion – or 42 percent – since the second quarter of 2013,” said Beacon Research President Jeremy Alexander. “Fixed indexed annuities, setting new records in four of the past five quarter, are leading the way – accounting for 53 percent of the overall sales increase. In addition, combined first and second quarter year-to-date sales of fixed non-MVA products increased by 37 percent; fixed MVA products increased 111 percent; and income annuity products are up 41 percent. For the first time, on a year-to-date basis, broker-dealer market share – 16.6 percent – has surpassed captive agent market share – 11.5 percent – in the sale of fixed annuities.”
[Click here to access complete fixed annuity sales data in the PDF version of this release.]
According to Morningstar, variable annuity net assets continue to reach new all-time highs, closing the second quarter at $1.93 trillion. Variable annuity net sales swung back into positive territory during the second quarter of 2014, reaching $1.6 billion, according to Morningstar’s estimates. Within the variable annuity market, there were $23.2 billion in qualified sales and $12.4 billion in non-qualified sales.
“VA sales bounced back in the second quarter, with eight of the top 10 issuers posting increases,” said John McCarthy, Product Manager, Annuity Solutions, at Morningstar. “VA sales continue to flow into living-benefit-based annuities. At the same time, interest is increasing for VA products that allow investors to diversify with alternatives in a tax beneficial way.”
[Click here to access complete variable annuity sales data in the PDF version of this release.]