Annuity Sales Rise 10% in Q1: Wink
Structured annuities rocked in sales from last year, while multi-year guaranteed annuities also performed well.
Low interest rates are continuing to push U.S. life insurers toward offering annuities without minimum annual return guarantee, according to new issuer survey data from Wink Inc.
U.S. sales of individual deferred annuities climbed to $58 billion, up 10% from the total for the first quarter of 2020, the Des Moines, Iowa-based firm says.
Wink based the new figures on reports from 14 structured annuity issuers, 48 variable annuity issuers, 59 fixed annuity issuers and 79 multi-year guaranteed annuity (MYGA) issuers.
The issuers increased sales of three types of non-variable annuities 5.8%, to $28 billion.
Variable annuities sales jumped 18%, to $30 billion.
A structured annuity is a variable annuity contract that gives the holder a predetermined amount of protection against loss of principal, rather than a promise of full protection against loss of principal.
A MYGA annuity contract provides a set crediting rate guarantee for a specified number of years.
Interest rates affect annuity prices and sales because life insurers depend heavily on investments in bonds and other fixed-income instruments to generate the income needed to meet annuity obligations.
Here’s a look at how sales of the types of annuities Wink tracks changed between the first quarters of 2020 and 2021:
- Structured Annuities: $9 billion (up 86%)
- Multi-year Guaranteed Annuity Contracts: $13 billion (up 32%)
- Variable Annuities, Other Than Structured Annuities: $21 billion (up 1.3%)
- Indexed Annuities Filed as Non-Variable Contracts: $14 billion (down 12%)
- Traditional Fixed Annuities: $477 million (down 31%)
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