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Total Annuity Sales Fall 2% in Q3

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According to a recent report from LIMRA, lower interest rates continue to place a lag on fixed annuity sales. Going inside the numbers, total U.S. annuity sales reached $58.2 billion in the third quarter, falling 2% from prior year. But all the news was not bad. In the first nine months of 2014, total U.S. annuity sales increased 6%, compared with 2013, to reach $177.7 billion.

“Throughout the year, fixed annuities have been the primary driver of overall annuity growth,” said Todd Giesing, senior analyst, LIMRA Secure Retirement Institute Annuity Research. “The 50 basis-point drop in interest rates since the start of the year has dampened interest in fixed products, pulling down third-quarter sales.”

Highlights from the report:

* On the fixed annuity side, sales were $22.7 billion in the third quarter, down 5% versus the prior year. Year-to-date, fixed annuity sales reached $71.8 billion, a 21% increase from 2013.

* Deferred annuities fell 32% compared to the prior year. Fixed-rate deferred annuities reached $22.4 billion in the first nine months, an 8% increase compared to last year.

* Index annuity sales grew 15% in the third quarter, to $11.7 billion. YTD, indexed annuity sales grew 31%, totaling $36 billion. 

* The indexed annuity guaranteed living benefits (GLBs) election rate was 69% (when available) in the third quarter 2014.

* Deferred income annuity (DIA) sales reached $670 million in the third quarter, 21% higher than prior year. In the first nine months of 2014, DIAs jumped 35%, totaling $2.0 billion. The top three writers continue to drive most of the DIA sales, accounting for 75% of third quarter DIA sales.

* Single premium immediate annuity sales were up 10% in the third quarter to reach $2.3 billion. YTD, SPIA sales jumped 30% to reach $7.4 billion. LIMRA Secure Retirement Institute predicts SPIA sales will exceed current annual sales records. 

* Variable annuity (VA) sales fell 1% in the third quarter, totaling $35.5 billion. YTD, VAs reached $105.9 billion, a three% drop from 2013. LIMRA Secure Retirement Institute researchers noted many of the top VA sellers are focusing on diversification of their VA GLB business. In the second quarter, a few of the top companies entered the market with accumulation focused product without a GLB rider. Election rates for VA GLB riders, when available, were 76% in the third quarter of 2014.

Top twenty rankings of total, variable and fixed annuity writers will be posted Nov. 20.

— Check out AIG Jumps In With Longevity Annuity for IRAs on ThinkAdvisor.