Rising Rates Push Sales of Individual Deferred Annuities Higher: Wink
Traditional variable annuities performed poorly.
Soaring interest rates might complicate the lives of life insurance company risk managers, but they were great for individual fixed annuity sales in the fourth quarter of 2022.
Overall sales of all types of deferred contracts increased 30% between the fourth quarter of 2021 and the latest quarter, to $79 billion, according to new issuer survey data from Wink.
Sales of three types of products classified as fixed — traditional fixed annuities, non-variable indexed annuities and multi-year guaranteed annuity (MYGA) contracts — climbed 102%, to $58 billion.
Sheryl Moore, Wink’s CEO, said MYGA contracts in particular benefited both from increases in crediting rates and consumers’ fear of market volatility.
“Eighteen percent of insurance companies offering MYGAs experienced at least triple-digit sales increases over the prior quarter,” Moore noted.
Here’s a look at how sales of some of the types of annuities Wink tracks changed between the fourth quarters of 2021 and 2022:
- Multi-year guaranteed annuity contracts: $36 billion (+217%)
- Non-variable indexed annuities: $22 billion (+28%)
- Traditional fixed annuities: $575 million (+18%)
- Index-linked variable annuity contracts: $9.3 billion (-7.1%)
- Traditional variable annuities: $12 billion (-45%)
Wink based the latest annuity sales figures on data from 18 index-linked variable annuity issuers, 48 variable annuity issuers, 51 traditional fixed annuity issuers and 85 multi-year guaranteed annuity (MYGA) issuers.
Sheryl Moore (Photo: Wink)