Fixed Indexed Annuity Sales Break Records in Q3, Says LIMRA

LIMRA Secure Retirement Institute’s third-quarter sales survey finds that sales of fixed indexed annuities “smashed” sales records for the second consecutive quarter.

Sales of FIAs were $18.0 billion, according to the survey, which represents 95% of the market. They came in 38% higher than a year ago and 2% higher than the second quarter.

FIA sales were $50.1 billion year to date, which is 22% higher than the first three quarters of 2017. And LIMRA SRI anticipates the trend to continue through year end, forecasting total 2018 FIA sales to be in the $70 billion range. In 2019 and 2020, however, it does anticipate slower growth.

Fixed-rate deferred annuity sales soared 51% in Q3 to $11.2 billion, with year-to-date sales at $31.3 billion, 17% higher than last year.

“The entire annuity market benefited from strong growth in interest rates. Over the past year, the 10-year Treasury rate has increased nearly 60 basis points and ended the third quarter above the 3% mark,” Todd Giesing, annuity research director of LIMRA SRI, said in a statement.

Giesing added, “Unlike prior quarters when accumulation products drove the growth, FIA products with guaranteed lifetime benefit riders showed the most growth in the third quarter. In a higher-interest rate environment, companies are able to increase their guaranteed lifetime withdrawal rates, making these products more attractive to consumers looking to create guaranteed income in retirement.”

Variable annuity sales were up, too, rising 25% in the third quarter to $25.0 billion, compared with prior-year results. In the first nine months of 2018, VA sales were $75.4 billion, up 4%, compared with the same period in 2017. And registered indexed-linked annuity sales for Q3 rose 27% to $2.98 billion, representing 12% of the VA market. Year to date, RILA sales were $7.68 billion, 13% higher than last year.