Annuity sales rebound from Q1, fall below prior year results

U.S. annuity sales topped $60 billion in the second quarter 2015, according to a LIMRA report, but that figure falls 3 percent short of sales for the same period a year ago.

“Second quarter annuity sales results were 10 percent higher than in the first quarter. Annuity sales were strong–since 2010, quarterly annuity sales have only reached $60 billion five times,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Research. “However, last year’s sales were particularly strong and lower interest rates played a role in undercutting this year’s growth.”

Total annuity sales reached $114.6 billion for the first half of the year–5 percent lower than a year ago.

Additional highlights from the report:

* Variable annuity sales have been stronger in the second quarter than in the first quarter for the past 11 years. VA sales jumped 11 percent from first quarter. But VA sales were $36 billion, 1 percent lower than prior year. Year-to-date, VA sales were down 3 percent, to $68.4 billion. 

* GLB riders. Preliminary results indicate that election rates for guaranteed living benefit (GLB) riders when available will be slightly higher than prior quarter (77 percent).

* Fixed annuities. While interest rates have risen throughout the year, they still are below the rates enjoyed at the same time of 2014.  As a result, total sales of fixed annuities were down 6 percent in the second quarter, to $24.2 billion. In the first six months of 2015, fixed sales were down 7 percent, to $46.2 billion. 

* Fixed rate deferred annuities declined 5 percent in the second quarter, totaling $7.5 billion. In the first six months of 2015, fixed-rate deferred sales were $14.0 billion, 14 percent lower than last year.