Some retirement savers will still tie their annuity returns to the performance of investment funds, if the market looks good and insurers will sell them variable annuities.
New annuity sales figures from Wink showed that sales of traditional variable annuities were stronger than for any other class of annuities that Wink tracks.
Sales of traditional variable annuities increased 53% between the fourth quarter of 2023 and the fourth quarter of 2024, to $18 billion.
Sales of registered index-linked annuities, or contracts with crediting rates linked to the performance of stock indexes, rather than investment funds, rose 38%, to $35 billion.
Fixed indexed annuities, which resemble RILA contracts but protect principal against losses related to the performance of the investment markets, increased 22%, to $32 billion, but sellers of multi-year guaranteed annuities, which promise to provide a guaranteed interest rate for a specified term, fell 45%, to $29 billion.
What it means: A few years ago, retirement savers were hunkering down in financial storm cellars and just trying to protect their nest eggs against market meltdowns. Now, retirement savers think the stock market looks good — and some insurers might not be eager to offer them attractive crediting rate guarantees.
The backdrop: In recent weeks, when executives from some publicly traded insurers reviewed their fourth-quarter earnings, the executives talked about a need to raise capital or allocate capital to favored products from less favored products.
That might be a sign that several years of strong annuity sales have used up much of the capital that some annuity issuers use to support new annuity guarantees. Those annuity issuers may have to attract new capital, raise prices or tilt toward selling less capital-intensive products.
The results might also be the result of some consumers with traditional variable annuities coming to the end of surrender-charge periods, or times when moving assets could lead to big costs, and rolling some of the assets into new variable annuities.
Details: Here are the Wink survey results by product type:
- Traditional variable annuities: $18 billion (up 53%)
- Registered index-linked annuities: $17 billion (up 38%)
- Fixed indexed annuities: $32 billion (up 58%)
- Traditional fixed annuities: $491 million (down 33%)
- Multi-year guaranteed annuities: $29 billion (down 45%)
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