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Q2 Annuity Sales Look Better: IRI

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The Insured Retirement Institute says it’s seeing the same firming in U.S. individual fixed annuity sales that two other insurance industry organizations have detected.

Revenue from fixed annuity sales fell to $27 billion in the second quarter, IRI reported today.

That total is down 9.5% from the total IRI reported for the second quarter of 2016. But the year-over-decline has shrunk from 14% in the first quarter.

(Related: Annuity Sales May Be Starting to Firm Up: Wink)   

IRI, a Washington-based group for insurers and other players in the insurance-based retirement products market, broke the results down by product category:

  • Book value annuities: Sales fell 0.7%%, to $5.7 billion. (In the first quarter, sales fell 4.5%.)

  • Indexed annuities: Sales fell 7.1%, to $15 billion. (In the first quarter, sales fell 10.5%.)

  • Variable annuities: Sales fell 10%, to $24 billion. (In the first quarter, sales fell 10.4%.)

Variable annuity net assets increased to $2 trillion on June 30. The variable annuity asset total was up 2.9% from the total recorded a year earlier.

IRI gets its variable annuity market data from Morningstar Inc. and its fixed annuity market data from Beacon Research.

A summary of the IRI results is available here.

LIMRA, a nonprofit industry group, and Wink, a life insurance research firm, recently reported annuity issuer survey results showing similar trends.

Like IRI, LIMRA and Wink found that fixed annuity sales fell in the second quarter, year-over-year, but that the year-over-year rate of decline was much smaller in the second quarter than in the first quarter. 

Jeremy Alexander, Beacon chief executive officer, said in a statement that he believes fixed annuity sales started to firm up in spite of low interest rates and the confusion about the U.S. Department of Labor fiduciary rule standard.

“Consumer demand for conservative retirement income products continues to drive strong sales,” Alexander said.

John McCarthy, a senior product manager at Morningstar, said investment-oriented variable annuities appeared to do better than other types of variable annuities.

Sales of structured annuities accounted for 6.7% of variable annuity sales in the latest quarter, up from 4.5% in the second quarter of 2016, McCarthy said.

— Read 5 Top States for Annuity Payment Growth on ThinkAdvisor.

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