Many top annuity issuers say they have responded to the recent cuts in interest rates by tightening benefits and increasing prices.
Issuers’ efforts to rate-proof their annuity units may be starting to show up in annuity sales.
Overall sales of U.S. individual annuities fell 8% between the fourth quarter of 2018 and the fourth quarter of 2019, to $58 billion, according to new Secure Retirement Institute insurer survey results summary.
- A copy of the latest Secure Retirement Institute survey summary is available here, and a copy of the underlying summary data is available here.
- An article about annuity sales figures for the third quarter of 2019 is available here.
Sales of all kinds of fixed annuities, including indexed annuities classified as non-variable products, fell 18% between the fourth quarter of 2018 and the latest quarter, to $38 billion, according to the survey results summary.
Sales of variable annuities increased 8%, year-over-year, to $27 billion for the quarter.
Here’s what happened to sales of some types of annuities included in the survey results summary:
- Book value fixed annuities: $6.4 billion (down 35%)
- Indexed annuities that are classified as non-variable products: $17 billion (down 13%)
- Variable annuities, excluding indexed variable annuities: $22 billion (up 3%)
- Indexed variable annuities: $4.9 billion (up 39%)
- Fixed immediate annuities: $2.1 billion (down 22%)
For all of 2019, overall sales of all U.S. individual annuities increased 3%, to $242 billion.
Full-year fixed annuity sales increased 5% between 2018 and 2019, to $140 billion.
Full-year variable annuity sales rose 2%, to $102 billion.
Where Interest Rates Come In
Life insurers depend heavily on investments in corporate bonds, mortgage-backed securities and other fixed-rate assets to support insurance and annuity obligations.