The pain that afflicted the variable annuity market throughout 2016 spread to fixed annuities in the fourth quarter.
The Insured Retirement Institute reported U.S. annuity sales fell to $48.2 billion in the fourth quarter, down 18.4% from the total for the fourth quarter of 2015.
Revenue from new sales of variable annuities fell 21% over that same period, to $24.4 billion.
Revenue from new sales of fixed annuities fell 15.6%, to $23.8 billion, but fixed annuity sales for all of 2016 increased 11.1% from the total for all of 2015, to $109.3 billion.
Revenue from sales of annuities of all types fell to $221.4 billion in 2016, down 7.6% from the 2015 total, according to IRI.
IRI, a Washington-based group for insurers, broker-dealers, financial professionals and others involved with providing insurance-based retirement products, based the variable annuity market results on data from Morning Inc. It based the fixed annuity numbers on data from Beacon Research.
The National Association of Insurance Commissioners, a group for insurance regulators, reported earlier this month that total U.S. annuity premium revenue for the top 25 life and fraternal issuers fell to $253 billion for all of 2016, down 4.1% from the total for 2015.
A year ago, IRI said annuity sales for the fourth quarter of 2015 were 4.4% higher than annuity sales for the fourth quarter of 2014.
Low interest rates have hurt insurers’ ability to offer attractive crediting rates.
The uncertainty surrounding the Department of Labor fiduciary rule standards for annuity distributors and sellers also hurt.
IRI President and CEO Cathy Weatherford said in a statement that solid full-year sales for fixed annuities show that demand for the kinds of solutions offered by annuities still exists.
Given all of the gains retirement savers have accumulated in stocks and stock-related investments over the past eight years, “demand should continue to rise for solutions that can help them lock in those gains,” Weatherford said.
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