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Strong sales of registered index-linked annuities, or RILA contracts, helped life insurers generate year-over-year growth in annuity sales in the fourth quarter of 2020, in spite of the effects of COVID-19-related social distancing rules and low interest rates.
U.S. sales of individual annuities increased to $59 billion in the fourth quarter, up 2% from the total for the fourth quarter of 2019, according to issuer survey data compiled by the Secure Retirement Institute, which is an arm of Windsor, Connecticut-based LL Global Inc.
Resources
- Secure Retirement Institute: Fourth Quarter Registered Index-Linked Annuities Propel Overall VA Sales to Pre-pandemic Levels
- U.S. Individual Annuity Sales Fall
The sales increase in the fourth quarter was the only year-over-year quarterly increase life insurers recorded in 2020.
The fourth quarter started Oct. 1, 2020, and ended Dec. 31, 2020.
Sales for the full year fell 9.5%, to $219 billion, mainly because of the effect of the pandemic on the amount of sales recorded in the second quarter, which started March 31, 2020, and ended June 30, 2020.
Here's how some types of products performed between the fourth quarter of 2019 and the fourth quarter of 2020:
- All Fixed Annuities: $31 billion (unchanged).
- Fixed-Rate Deferred Annuities: $13 billion (up 41%).
- All Types of Variable Annuities: $28 billion (up 4%).
- RILA Contracts (which some insurers call "buffer annuities" or "variable indexed annuities"): $8.3 billion (up 68%).
In the third quarter, RILA sales were 29% higher than in the third quarter of 2019.
— Read After the Catastrophic 1918 Flu Pandemic, Annuities Did Fine, on ThinkAdvisor.
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