Annuity sales trending slightly up year over year: IRI

The Insured Retirement Institute (IRI) announced final second-quarter 2016 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar Inc. Industrywide annuity sales in the second quarter of 2016 totaled $55.9 billion, which is virtually unchanged from sales of $56 billion during the first quarter of 2016, and a 4.3 percent decline from $58.4 billion in the second quarter of 2015.

According to Beacon Research, fixed annuity sales during the second quarter of 2016 reached $29.5 billion, a 1.9 percent decline from sales of $30 billion during the first quarter of 2016, but a 29.1 percent increase from sales of $22.8 billion during the second quarter of 2015. Variable annuity total sales were $26.4 billion in the second quarter of 2016, according to Morningstar. This was a 1.8 percent increase from sales of $26 billion in the prior quarter, but a 25.8 percent decline from $35.6 billion in the second quarter of 2015.

“Industrywide annuity sales, year to date, are nearly $112 billion,” IRI President and CEO Cathy Weatherford said in a press release. “This is slightly above where year-to-date sales were at this point in 2015. While sales continue to shift among product types and categories, the demand for lifetime income products remains steady. We fully expect the need for lifetime income to remain strong, though ongoing solution innovation and other factors will likely lead advisors to continue to rely upon a wide array of strategies to solve for their clients’ individual needs.”

According to Beacon Research, fixed annuity sales remained strong, reaching their second highest quarterly total in seven years. Sales were largely buoyed by continued robust sales of fixed indexed annuities, which narrowly missed setting a new quarterly sales record. Fixed indexed annuity sales reached $16.1 billion in the second quarter of 2016, a 5.9 percent increase from sales of $15.2 billion in the previous quarter and a 28 percent increase from sales of $12.5 billion during the second quarter of 2015. For the entire fixed annuity market, there were approximately $17.1 billion in qualified sales and $12.4 billion in non-qualified sales during the second quarter of 2016.

“Increased sales of fixed indexed annuities within the independent broker-dealer channel largely offset the decline of other fixed annuity product types in the second quarter,” wrote Beacon Research CEO Jeremy Alexander. “Despite a modest quarterly decline, year-to-date total fixed annuity sales increased $15.8 billion to $59.5 billion, a 36.2 percent increase over the prior year.”

According to Morningstar, variable annuity net assets increased slightly in the second quarter of 2016, reaching $1.88 trillion. This represents a 0.3 percent increase from the end of the first quarter of 2016. Within the variable annuity market, there were $18.4 billion in qualified sales and $8 billion in non-qualified sales during the second quarter of 2016.