The Insured Retirement Institute (IRI) announced that second-quarter 2014 sales of annuities were at their highest levels in three years.
Citing data reported by Beacon Research and Morningstar Inc., IRI reported that sales rose to $59.9 billion, a 6.8% increase from the previous quarter – $56.1 billion in sales – and a 9.9% increase from the second quarter in 2013, when sales were $54.5 billion,. according to a statement.
The increase was seen in both fixed and variable annuities. In the second quarter of 2014, fixed annuity sales increased to $24.3 billion – a 7.6% increase from $22.6 billion in the first quarter and a 41.6% increase from $17.1 billion in the second quarter of 2013. According to Morningstar Inc., variable annuity sales reached $35.6 billion in the second quarter of 2014 – a 6.2% increase from $33.5 billion in the first quarter of 2014, however this was a 4.6% decline from $37.3 billion in the second quarter
“We’re seeing a specific demographic – baby boomers – driving an interest in the product,” Frank O’Connor, vice president of research and outreach for IRI, told ThinkAdvisor.
Beacon Research found that the continued growth in fixed annuity sales was supported by a surge in fixed indexed annuity sales, which rose to 12.9 billion in the second quarter of 2014. This is a 14.8% increase from first-quarter 2014 and a 41.5% increase from second-quarter 2013, the data showed.
There was also an increase in income annuity sales in the quarter to $3.39 billion – a 3.2% increase from the previous quarter and a 32.7% jump from the year-ago quarter, according to the IRI statement.
“We are enjoying a prolonged resurgence of fixed annuity sales of all types, with sales up $7.1 billion – or 42% – since the second quarter of 2013,” said Beacon Research President Jeremy Alexander in the statement. “Fixed indexed annuities, setting new records in four of the past five quarter, are leading the way – accounting for 53% of the overall sales increase. In addition, combined first- and second-quarter year-to-date sales of fixed non-[market value adjusted] products increased by 37%; fixed MVA products increased 111%; and income annuity products are up 41%. For the first time, on a year-to-date basis, broker-dealer market share – 16.6% – has surpassed captive agent market share – 11.5% – in the sale of fixed annuities.”