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Total U.S. annuity sales improve three percent in 2014

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According to LIMRA’s Fourth Quarter 2014 U.S. Annuity Sales Survey, the news looks good for the industry. Total U.S. annuity sales in 2014 rose 3 percent to $235.8 billion, with indexed and income annuities leading the way.

“Despite interest rates falling nearly a percentage point in 2014, indexed annuities and income annuity sales – fixed immediate and deferred income – topped record sales levels,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Institute. “The performance of these products certainly propelled overall annuity sales to increase in 2014.”

Some highlights from the report:

* Total annuity sales in the fourth quarter were $58.1 billion, a 6 percent dip compared with the fourth quarter of 2013.

* Indexed annuity sales hit $48.2 billion in 2014 – $9.0 billion higher than prior year – a 23 percent increase from 2013.  ”For the first time, indexed annuities held more than 50 percent market share of all fixed annuity sales in 2014.”  

* Immediate income annuity sales spiked 17 percent in 2014, totaling $9.7 billion.  

“In the run up to the fourth quarter of 2013 interest rates were trending upward, reaching over 3 percent at year-end,” Giesing noted.  “Quite the opposite occurred in the fourth quarter of 2014, where interest rates dropped a third of point, falling to 2.17 percent at the end of 2014.”

More highlights:

* Deferred income annuities (DIAs) experienced record growth in 2014, reaching $2.7 billion, a 22 percent jump from 2013.  

* Sales of fixed-rate deferred annuities (Book Value and MVA) were 1 percent higher in 2014, compared with 2013 sales, to reach $29.7 billion.  

* Overall fixed annuity sales were $95.7 billion in 2014, improving 13 percent compared with 2013.  

* Variable annuity (VA) sales fell 4 percent in 2014, totaling $140.1 billion, the lowest annual VA sales since 2009.