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Sales of Index-Linked Variable Annuities Shine Again

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Sales of variable annuities outperformed sales of fixed annuities in the first quarter, according to new, preliminary insurer survey data from the Secure Retirement Institute.

Insurers reported that their sales of individual variable annuities in the United States increased 16% between the first quarter of 2019 and the latest quarter, to $26.5 billion.

Sales of a relatively new type of variable annuity, the registered index-linked annuity, or index-linked variable annuities, climbed 44%, to $5.1 billion.

Resources

  • 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 earlier article about annuity sales figures is available here.

The year-over-year growth rate for index-linked variable annuities was down from 55% in the fourth quarter of 2019.

Sales of fixed annuities, including index-linked annuities that are filed with insurance regulators as non-variable products, fell 22% between the first quarter of 2019 and the latest quarter, to $29.5 billion.

Combined sales of both variable and fixed annuities fell 8%, year-over-year, to $56 billion.

Here’s what happened to sales of some subtypes of annuities, other than registered index-linked annuities, that are included in the survey results summary:

  • Fixed-rate deferred annuities: $9.8 billion (down 35%)
  • Indexed annuities that are classified as non-variable products: $16 billion (down 12%)
  • Variable annuities, excluding indexed variable annuities: $21 billion (up 11%)
  • Deferred income annuities: $530 million (down 16%)
  • Fixed immediate annuities: $1.9 billion (down 32%)

The Secure Retirement Institute, which is an arm of Windsor, Connecticut-based LL Global, bases its quarterly annuity sales reports on responses to voluntary insurer surveys. The number of insurers that provided the data included in the preliminary first-quarter sales figures was not immediately available.

Todd Giesing, annuity research director at the Secure Retirement Institute, said in a comment on the results that the economic effects of the COVID-19 pandemic, and the resulting low interest rates, could push the annuity market in a different direction in the second quarter.

“We expect fixed-rate deferred product sales to improve in the second quarter as consumers seek to protect their investment from market volatility and losses,” Giesing said.

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