Retirement savers started the second quarter worrying about proposed import taxes and ended the quarter hoping the S&P 500 index would stay this beautiful forever.
Cold fear pressed against hot optimism for three months and produced a 5% increase in U.S. individual annuity sales, according to new issuer survey results from LIMRA.
Insurers increased total sales to $117 billion, from $111 billion a year earlier.
In spite of concerns that the "tariff tantrum" would push consumers back under the bed, fixed annuity sales rose just 4%, to $83 billion, and sales of variable annuities rose 8%, to $34 billion.
Sales of registered index-linked annuities — which maximize issuers' ability to pass stock market risk on to counterparties — climbed 20%, to $20 billion.
What it means: After all of the early second-quarter drama, the strength of the stock market ended up holding down fixed annuity sales, according to Keith Golembiewski, director of LIMRA annuity research.
But fixed annuity crediting rates still look better than bank certificate of deposit rates, and the concept of "protected growth" was popular, Golembiewski said.
Reactions: Gary Bhojwani, the chief executive officer of CNO Financial, said today that he thinks competition and volume in the annuity market will remain strong, partly because of asset managers' interest in the annuity market.
"The asset managers look at the annuity and the insurance business as, frankly, a really cheap source of funds," Bhojwani said during a conference call the company held to go over second-quarter earnings. "So they're going to continue to be very aggressive here."
George Esposito, head of insurance platforms at Zinnia, an annuity tech firm, said via email that he thinks retirement savers clearly are looking for products that can protect them from investment losses.
"The fundamental appeal of annuities hasn't changed," Esposito said. "What has changed is awareness."
Credit: Tadamichi/Adobe Stock
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