Annuity sales for first six months of year at lowest level since 2001
Fixed and variable annuity sales through the first six months of the year are at their lowest level since 2001, according to figures released on Wednesday.
Second-quarter 2017 annuity sales data was released this week by both the LIMRA Secure Retirement Institute and Wink’s Sales & Market Report, and while the April-June second quarter fared better than the first three months of the year in many categories, both sets of data show overall sales declines compared to 2016 figures.
LIMRA says total annuity sales are down 10% in the first six months of 2017 after declining by 8% over the second quarter compared to last year.
The Wink report says total second quarter 2017 non-variable deferred annuity sales were up over 2.2% from the prior quarter, but were down over 9.3% from the same period in 2016.
What follows are the detailed reports from both organizations, including sales data for various annuity product lines and carrier rankings.
LIMRA Secure Retirement Institute: First half 2017 annuity sales reach lowest level in 16 years
In the first half of the year, total annuity sales decreased 10% to $105.8 billion compared with the first six months of 2016, according to LIMRA Secure Retirement Institute’s Second Quarter 2017 U.S. Retail Annuity Sales Survey, released Aug. 23. First half sales have not been this low since 2001.
Second quarter results for total annuity sales were $53.9 billion, a slight uptick from first quarter, but an 8% decline from this quarter last year. This is the fifth consecutive quarter of decline in overall annuity sales. It is also the sixth straight quarter fixed annuity sales have outperformed variable annuity sales, which hasn’t happened in almost 25 years.
U.S. variable annuity (VA) sales were $24.7 billion in the second quarter, down 8% compared with prior year results. This marks the 14th consecutive quarter of decline in VA sales. Sales from the first half of 2017 VA sales were $49.1 billion — 8% lower than the first six months of 2016.
“A closer look at what’s driving the drop in VA sales reveals qualified VA sales have experienced a more significant decline than non-qualified VAs,” said Todd Giesing, director, Annuity Research, LIMRA Secure Retirement Institute. “VA qualified sales were down 16% in the second quarter, while nonqualified sales were actually up 5%. This could be in reaction to the DOL fiduciary rule.”
Second quarter qualified VA sales accounted for 58% of retail variable annuity sales, a five-percentage points decline from the same quarter last year.
Sales of fee-based variable annuities increased in the second quarter to $570 million, representing 2.3% of the total VA market. While this is a small portion of the overall VA market, these products have seen continued growth over last year.
Another VA product line that has experienced growth is structured variable annuities. In the second quarter, sales of these products increased 36%, reaching $1.8 billion, which represents 7% of the VA market.
The Institute forecasts that VA sales will drop 10-15% in 2017, totaling less than $100 billion. This has not occurred since 1998.
Fixed annuity sales also declined in the second quarter. Sales were down 7% to $29.2 billion. All fixed product lines sales, except structured settlements, experienced declines. In the first half of 2017, fixed sales fell 11% to $56.7 billion.
Second quarter indexed annuity sales totaled $15.6 billion, a 15% increase from first quarter but are still 4% lower than prior year results. Nine of the top 10 companies have reported quarter-over-quarter growth. The Institute predicts indexed annuity sales will decline 5-10% in 2017.
Fixed rate deferred annuities (Book Value and MVA) sales dropped 11% in the second quarter to $9.3 billion. Year-to-date, fixed rate deferred annuity sales were $19.4 billion, 14% lower compared to 2016 results.
In the second quarter, deferred income annuity (DIA) and single premium income annuity (SPIA) sales both experienced declines. DIA sales were down 31% to just $600 million. SPIAs were down to $2.2 billion in the second quarter—a 12% drop.
The second quarter 2017 Annuities Industry Estimates can be found in LIMRA’s Data Bank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2007-2016. To view the top 20 rankings of total, variable and fixed annuity writers for second quarter 2017, please visit Second Quarter 2017 Annuity Rankings. To view the top 20 rankings of only fixed annuity writers for second quarter 2017, please visit Second Quarter 2017 Fixed Annuity Rankings. LIMRA Secure Retirement Institute's Second Quarter U.S. Individual Annuities Sales Survey represents data from 97% of the market.
Next page: Wink’s Sales & Market Report
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