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Fixed Annuities Sales Surge in First Quarter: IRI

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Total annuity sales reached $57.8 billion for the first quarter of 2019, a slight dip from the last quarter of 2018, with fixed annuity sales surging from the year-ago quarter, according to the Insured Retirement Institute.

Market volatility late last year and interest rate pressures tell part of the story, according to data researchers.

Industrywide annuity sales rose 17.5% year over year but dipped 3.6% from the fourth quarter, the IRI said Friday, based on data reported by Beacon Research and Morningstar.

(Related: Fixed Index Annuity Sales Shine in Third Quarter: IRI)

Sales of variable annuities declined from the fourth quarter 2018, down almost 10% from 2018 fourth quarter sales, hitting $20.7 billion. Sales dipped the same percentage amount — 9.8% —from the year-ago first quarter, as well.

However, net assets of variable annuities were up 6.5% to $1.93 in the first quarter from fourth-quarter 2018 due to equity market recovery after the volatility at the end of last year, according to the research.

These numbers are still off a high of over $2 trillion from the third quarter of 2018. There has been pressure from negative net asset flow, but Morningstar’s senior quantitative analyst Michael Manetta anticipates sales “resuming an upward trajectory as newer product types such as structured annuities come into broader use.”

Fixed annuity sales reached $37.1 billion, almost 41% higher than 2018 first-quarter sales of $26.3 billion. However, they crawled up only 0.17 % from fourth-quarter sales.

In fixed products, indexed annuities led the charge, with $18.1 billion in sales, still down from the highs at the end of 2018, but 24% higher than the year-ago 2018 sales of $14.6 billion, according to Beacon Research.

Market value adjusted annuity sales of $6.2 billion surged mightily both year-over-year and from the fourth quarter. In fact, MVA sales leapt 85.8% versus first-quarter 2018 sales of $3.3 billion, according to the research.

Income annuity sales climbed slightly from the fourth quarter but jumped 35% from the year-ago quarter to reach $3.3 billion.

The first quarter of 2019 saw approximately $21.6 billion in qualified sales and $16.1 billion in non-qualified sales, according to IRI and its data partners. The variable annuity market chalked up $12.8 billion in qualified sales and $7.9 billion in nonqualified sales during the first quarter, according to Morningstar.

First quarter results can be attributed to the market volatility experienced in late 2018 as well as during the first part of 2019, Beacon Research CEO Jeremy Alexander said in a statement accompanying the data.

“We continue to expect strong growth in the years ahead as these needs remain paramount for retirees and those planning for retirement,” he said.

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