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Annuity sales rebound from Q1, fall below prior year results

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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. 

* Indexed annuity sales were $12.5 billion, the second strongest quarter in history. However the best sales quarter for indexed annuities occurred in the same period of last year, resulting in a 4 percent decline for the second quarter 2015.

“We are seeing a purposeful shift in market share among the top indexed annuity companies. LIMRA Secure Retirement Institute predicts total indexed annuity sales in 2015 to be level to slightly less than 2014 results,” Giesing said. 

* Indexed annuities. Year to date, indexed annuities sales equaled $24.1 billion, down 1 percent compared to prior year.

* GLBs. Preliminary results for indexed annuity GLBs election rates (when available) are 68 percent (level with prior quarter). 

* SPIAs. Low interest rates impacted single premium income annuity (SPIA) sales in the second quarter. SPIA’s sales were off 15 percent for the quarter to $2.2 billion. In the first six months of 2015, SPIA sales were $4.2 billion, down 18 percent. 

* Deferred income annuity (DIA) sales were $551 million, 23 percent lower than second quarter of 2014. This is the lowest quarterly sales since second quarter of 2013. 

* DIAs, QLACs. LIMRA Secure Retirement Institute reports there are now 16 carriers offering DIAs, up from nine in 2013. In addition, there are nine companies are now offering QLAC.