First-quarter annuity sales reached $56.7 billion, a 7.6% increase from the year-ago quarter but down 4.1% from the previous quarter, according to just-released research by Beacon Research and Morningstar.
The Insured Retirement Institute, a lobbying group for the annuity industry, cited the research in a report released Friday.
Fixed annuity sales during the quarter were at their highest level in seven years, Beacon found, while sales of fixed annuities reached $30.7 billion, a 47.2% increase from the first quarter of 2015 and up 8.8% compared with the fourth quarter of 2015.
Variable annuity total sales decreased to $26 billion in the first quarter of 2016, according to Morningstar. This was an 18.5% decline from $31.8 billion in the year-ago quarter and a 16% decline from $30.9 billion in the prior quarter, IRI reported.
But it remains to be seen if annuity sales will continue to do well, as the annuity industry is challenging in various courts the Department of Labor’s rule to amend the definition of fiduciary on retirement accounts on the basis that the rule attacks annuities.
The American Council of Life Insurers, the National Association of Insurance and Financial Advisors, the Indexed Annuity Leadership Council, the National Association of Fixed Annuities and an insurance agency, the Market Synergy Group, have all filed lawsuits against DOL. The final DOL regulation “unfairly targets certain types of fixed annuity products, making it harder for Americans to purchase fixed indexed annuities when it is in their best interest to do so,” said Jim Poolman, IALC’s executive director, adding that the “legal challenge is necessary because the rule creates an unworkable standard for independent agents and insurance companies and goes far beyond DOL’s authority.”
According to Beacon Research, strong quarterly sales were once again largely supported by robust sales of fixed indexed annuities.