Annuity sales decline 7% in Q1 2015

After riding a wave of recent good news, the annuity industry was dealt a blow as total U.S. annuity sales dropped 7 percent in the first quarter, according to research compiled by LIMRA. 

 

Every major product line except indexed annuities and structured settlements experienced declines in the first quarter. 

 

“Persistent low interest rates and market volatility in the first quarter had an impact on all product lines,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Research.  

 

“However,” Giesing added,” there may be a seasonal component to it as well.  Our research shows the first quarter is traditionally a slow quarter for annuity sales.  Total annuity sales have been lower in the first quarter than the prior quarter eight out of the last nine years.”

 

A closer look at the business lines:

 

* Variable annuity sales fell 5 percent in the first quarter, to $32.4 billion. This represents the lowest quarterly sales for VAs since the first quarter of 2010. 

 

* The election rate for GLB riders when available was 77 percent in the first quarter, which is down from a record high of 90 percent back in the first quarter 2012.

 

* Declining interest rates in the first quarter drove total fixed annuity sales to fall 8 percent, to $22 billion.

 

* Sales of fixed rate deferred annuities (Book Value and MVA) dropped 24 percent in the first quarter, totaling $6.4 billion.

 

* Indexed annuities increased 3 percent in the first quarter to $11.6 billion. This is the eighth consecutive quarter of increased sales. 

 

* Indexed annuity guaranteed living benefits (GLBs) election rates crept up slightly, with 68 percent electing a GLB when available.

 

* SPIA’s sales dropped 20 percent for the quarter to $2.0 billion.

 

* Deferred income annuity (DIAs) sales were $560 million in the first quarter, down 10 percent from the first quarter of 2014. 

 

* The 2015 first quarter  Annuities Industry Estimates can be found in the updated  Data Bank. 

 

* To view the top twenty rankings of total, variable and fixed annuity writers for first quarter 2015, please visit  2015 First Quarter Annuity Rankings.