Wink Sees 5.6% Increase in Individual Deferred Annuity Sales
Index-linked annuities and MYGA contracts did well. Sales of other types of annuities sank.
Low interest rate winds pushed U.S. individual deferred annuity sales way up or way down in the fourth quarter of 2020.
Overall sales increased 5.6%, according to new issuer survey data from Wink Inc.
But each individual type of annuity that Wink tracks experienced year-over-year sales growth over 40% or year-over-year sales shrinkage over 10%.
Wink uses the term “structured annuities” to refer to variable annuities that offer crediting rates tied to investment index performance.
Here’s a look at how sales of structured annuities and the other types of annuities Wink tracks changed between the fourth quarter of 2020 and the latest quarter:
- Structured Annuities: $8.4 billion (up 71%)
- Multi-Year Guaranteed Annuity contracts: $13 billion (up 45%)
- Traditional Variable Annuities: $19 billion (down 11%)
- Indexed Annuities Filed as Non-Variable Contracts: $15 billion (down 12%)
- Traditional Fixed Annuities: $474 million (down 31%)
Wink collected sales data for the latest quarter from 14 structured annuity issuers, 46 variable annuity issuers, 45 fixed annuity issuers, 61 indexed annuity issuers and 69 MYGA issuers.
Risk Appetite Trends
Individual annuity sales changes were so large in the fourth quarter partly because of insurers’ conscious efforts to cope with low interest rates by shifting away from the sale of products that offer firm account value guarantees.
Wink analysts found that many of the life insurers with strong MYGA sales in the latest quarter were owned by private equity funds: Private equity-owned insurers accounted for 25% of all reported MYGA sales.
“Expect these companies to shift their focus to the indexed annuity market, once option costs become less prohibitive,” the Wink analysts wrote in a commentary on the survey results.
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