Structured annuities flew off the shelves in the fourth quarter, according to new issuer survey data from Wink Inc.
Total sales of individual non-variable annuities fell to $27 billion in the quarter, down 18% from the total for the fourth quarter of 2018, Wink reports.
Sales of structured annuities — variable deferred annuity contracts that give the holder some protection against poor investment market performance — climbed 39%, to $4.9 billion.
- A copy of Wink’s latest survey summary is available here.
- An article about the Wink numbers for the third quarter of 2019 is available here.
- An article about structured annuities is available here.
Wink bases its results on an issuer survey.
The company began asking about sales of all kinds of variable deferred annuities in the survey for the first quarter of 2019. The starting dates for the other data streams range from 2009, for indexed annuities, to 2018, for structured annuities.
Wink has 2019 data from nine structured annuity issuers, 31 issuers of all types of variable annuities, 44 issuers of traditional fixed annuities, 49 indexed annuity issuers, and 53 issuers of MYGA contracts.
Structured annuities began to attract attention around 2015, when insurers began to promote them as a middle ground between variable annuities and non-variable indexed annuities.
“It will be interesting to see how low fixed interest rates, coupled with market volatility, will affect this immature product line, in terms of sales,” Sheryl Moore, Wink’s president, said in a comment on the latest survey results.
Here’s a look at how sales of some of the types of annuities Wink tracks changed between the fourth quarter of 2018 and the latest quarter:
- Traditional fixed annuities: Down 26%
- Indexed annuities filed as non-variable contracts: Down 11%
- Multi-year guaranteed annuity (MYGA) contracts: Down 28%
Bond Yields and Annuities
Annuity issuers depend heavily on income from investments in bonds and other fixed-rate assets to support annuity obligations.
Interest rates were rising in early 2019, but 10-year Treasury rates fell like a rock in May, stabilized in October, then returned to falling like a rock last month.
Many issuers have responded to the recent rate volatility by suspending sales of some annuities and annuity features, and changing the prices of the products they are still selling. That means any drops in sales in later quarters could reflect issuers’ appetite for new annuity business as well as consumers’ appetite for income protection products.
— Read Non-Variable Annuity Sales Still Look Good: Survey Manager, on ThinkAdvisor.