Although the start of the year was a rough period for markets, total U.S. annuity sales increased 4% during the first quarter to $63.3 billion, driven by fixed indexed annuity and fixed-rate deferred sales growth, according to LIMRA’s U.S. Individual Annuity Sales Survey.
“FIA and FRD sales benefited from rising interest rates and increased market volatility, as investors sought protected growth options,” says Todd Giesing, assistant vice president, LIMRA annuity research. “LIMRA is forecasting these products to thrive under current market conditions, growing 5% to 10% by year-end.”
Overall, fixed annuity sales rose 14% in the first quarter to $35.2 billion, LIMRA says. All fixed products except income annuities recorded positive growth.
FIA sales were $16.3 billion, 21% higher than first-quarter 2021 results. LIMRA predicts FIA sales will grow as much as 10% by the end of the year. Fixed-rate deferred annuity sales increased 9% in the first quarter, year-over-year, to $15.9 billion. LIMRA is forecasting as much as 7% growth in 2022.
Immediate income annuity sales were $1.5 billion in the first three months of the year, equal the results from the prior year. Deferred income annuity sales totaled $365 million in the first quarter, down 14% year-over-year.
With interest rates expected to continue to rise throughout 2022, LIMRA says it has forecast as much as 15% growth collectively for immediate and deferred income annuity sales.
Total variable annuity sales fell 6% in the first quarter to $28.1 billion, the survey says. Traditional variable annuity sales were $18.5 billion in the first quarter, down 11% year-over-year. By the end of 2022, LIMRA predicts traditional VA sales to grow by as much as 8%.
Registered index-linked annuity sales grew 5% to $9.6 billion in the first quarter. LIMRA expects an increase in RILA sales as high as 30% by year-end 2022.
First-quarter 2022 annuities industry estimates are based on LIMRA’s quarterly annuity sales survey, which represents 91% of the total market.
As annuity assets continue to grow, earlier this month South Carolina became the 24th U.S. State to adopt enhanced consumer protections that align with the standards finalized in early 2020 by the National Association of Insurance Commissioners in its Suitability in Annuity Transactions Model Regulation.
These standards align with those set out by the Securities and Exchange Commission’s Regulation Best Interest. In practice, this means that the annuity transactions standards require best-interest service without mandating that all advisers to such transactions act in a fiduciary capacity. Supporters of the NAIC approach say that, unlike a “fiduciary-only approach,” the best-interest framework ensures that all savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security throughout retirement.