Variable annuity sales fall in advance of DOL rule

Sales of fixed indexed annuities could exceed $60 billion this year, according to data from the LIMRA Secure Retirement Institute.

The organization’s third-quarter “U.S. Annuity Sales Survey” found fixed indexed annuity sales reached $15 billion during the third quarter, up 5 percent from last year, and to $46.9 billion for the first three quarters, up 22 percent year over year.

“While most other annuity products have faltered because of falling interest rates and anticipation of the Department of Labor (DOL) fiduciary rule, FIAs continue to thrive,” wrote Todd Giesing, assistant research director, LIMRA Secure Retirement Institute, in a press release. “Indexed annuities are on pace to exceed $60 billion by year end, a 10 to 15 percent increase over prior year.”

Related: What’s behind the surge in fixed indexed annuity sales?

Including all categories, annuity sales were $53.6 billion during the third quarter, down 11 percent from last year, representing the second consecutive quarter of decline for overall annuity sales. To date this year, annuity sales have declined 2 percent to $170.9 billion.

Fixed annuities maintained the majority of sales — 51 percent fixed to 49 percent variable annuities — for the third consecutive quarter. Two years ago, variable annuities held the majority of sales at 61 percent, LIMRA said. Variable annuity sales totaled $25.9 billion for the quarter, down 21 percent from last year, and $79.4 billion for the first three quarters, down $22 billion from the same period last year.

“There has been a significant drop in sales by independent broker-dealers this year as they prepare for the impending DOL fiduciary rule,” Giesing said. “With so many factors still unknown, carriers have been slow to introduce new products.”

The LIMRA Secure Retirement Institute expects variable annuity sales to finish the year at $105 billion, down slightly more than 20 percent from last year. Absent any forthcoming changes to the Labor Department rule, which is scheduled to go into effect next year, LIMRA expects variable annuity sales to fall an additional 25 to 30 percent in 2017.

Overall fixed annuity sales increased 1 percent to $27.7 billion for the quarter and $91.5 billion for the year to date, an increase of 25 percent. LIMRA expects sales of fixed annuities to increase 15 to 20 percent for 2016, countering the decline in variable annuity sales and resulting in flat overall annuity sales for the year.

Sales of fixed-rate deferred annuities fell 4 percent, to $8.5 billion. Year-to-date, fixed-rate deferred product sales totaled $31 billion, up 38 percent, said LIMRA.

Falling interest rates in the third quarter undermined income annuity sales. Fixed immediate annuity sales dropped 4 percent in third quarter to $2.2 billion. Year-to-date, fixed immediate annuity sales equaled $7.2 billion, 11 percent higher than the first nine months of 2015.

The institute expects fixed immediate annuity sales to end the year around $9.5 billion, 7 percent higher than 2015.

Deferred income annuity sales fell 11 percent in the quarter to $605 million. Year-to-date, deferred income annuities improved 19 percent compared with the prior year, totaling $2.2 billion. DIA sales are projected to exceed $3 billion, around 15 percent higher than 2015, the institute said.

Continue reading to see LIMRA’s rankings of top annuity carriers for the third quarter:

Jackson National Life regained its top spot among annuity providers during the third quarter. The company ranked second in LIMRA Secure Retirement Institute’s second-quarter ranking.

Overall annuity sales

1. Jackson National Life, $14 billion.

2. AIG Cos., $13.6 billion.

3. Allianz Life of North America, $9.9 billion.

4. New York Life, $9.8 billion.

5. TIAA, $9.8 billion.

6. AXA US, $7.7 billion.

7. Lincoln Financial Group, $6.7 billion.

8. Prudential Annuities, $6.7 billion.

9. MetLife, $6 billion.

10. Nationwide, $6 billion.

The offices of financial services firm TIAA-CREF in New York City. The company maintained its second-place spot behind Jackson National Life during the third quarter among variable annuity providers. (Photo: Mark Lennihan/AP Photo)

Variable annuity sales

1. Jackson National Life, $12.9 billion.

2. TIAA, $9.8 billion.

3. AXA US, $7.6 billion.

4. Prudential Annuities, $6.3 billion.

5. AIG Cos., $6.1 billion.

6. Lincoln Financial Group, $5.2 billion.

7. MetLife, $3.5 billion.

8. RiverSource Life Insurance, $3.5 billion.

9. Nationwide, $3.4 billion.

10. TransAmerica, $3.4 billion.

Allianz Life of North America continued to lead the market in fixed annuity sales. (Photo: Christof Stache/AP Photo)