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Industry Spotlight > Broker Dealers

State of the industry: 5 annuity insights for 2015

By Daniel Williams

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According to a report released today, the insurance and retirement industries are muscling through “some macroeconomic challenges (that occurred) the past year” and are exhibiting strong gains and growth potential.

“Fixed indexed annuities and immediate and deferred income annuities are showing especially strong growth as the industry is poised to begin 2015 in a strong financial position and with favorable public policy support,” said Cathy Weatherford, President and CEO of IRI, the company that authored the report.

“As Americans become more aware of their retirement income needs, the industry is presented with the tremendous marketplace opportunity to innovate and develop new products to match the increasing demand for insured retirement products.”

The following are five highlights from the State of the Industry report:

* A December 2014 Moody’s Investor Service report found that the industry as a whole has a strong operating company liquidity, with liquidity resources on average of 2.6 times its needs compared to approximately double its needs in 2008.

* Industry-wide annuity sales are on track to increase three to five percent in 2014, reaching or exceeding $225 billion, the highest level since 2011.

* Third quarter variable annuity assets were 179 percent higher than their post-crisis low point of $1.07 trillion in the first quarter of 2009, and two percent higher than the end of 2013.

* New product developments are meeting consumer needs by providing limited downside protection, higher payout rates than traditional benefits, and increased flexibility of income start dates.

* Deferred Income Annuity (DIA) sales have more than doubled to $2.2 billion in 2013 and will likely exceed that level in 2014. The number of companies offering DIAs has also doubled since the start of 2012.

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