Total annuity sales increased 12% year-over-year to $88.6 billion in the second quarter of 2023, found latest results from LIMRA’s U.S. Individual Annuity Sales Survey.
The first six months of the year saw annuity sales climb 28% to a total of $182.7 billion. Provisions brought on by SECURE 2.0, along with more favorable investor sentiments and decelerated interest rates, may have prompted higher sales.
Once a smaller product in the market, registered index-linked annuities (RILA) and fixed indexed annuities (FIA) sales skyrocketed in the first half of the year, LIMRA noted in its research.
RILA sales totaled $11.6 billion in Q2 and $22 billion in the first half of the year. As a result, LIMRA predicts RILA sales will increase their margins by at least 10% by year-end 2023.
FIAs also set a sales record for the fifth consecutive quarter, at $25.4 billion and up 29% Q2 2022. Year-to-date sales from FIAs grew 35% to $48.5 billion.
“Double-digit equity market increases and stable interest rates have prompted investors to seek out greater investment growth opportunity through RILAs and FIAs,” said Todd Giesing, assistant vice president of LIMRA Annuity Research, in a statement. “Economic conditions continue to be favorable for the annuity market.”
As a result, LIMRA said it is forecasting a strong second half of the year and expects 2023 sales to potentially surpass the record sales set in 2022.
Income annuities see gains too
The income annuity market also achieved its highest quarterly sales ever, at $4.5 billion. Single premium immediate annuity (SPIA) sales were $3.4 billion in the second quarter, 68% higher than Q2 2022 results. The first six months of 2023 also saw SPIA sales grow 93% to $6.8 billion.
Deferred income annuity (DIA) sales reached $1.1 billion, more than doubling its sales compared to Q2 2022, found LIMRA.
“The remarkable growth of income annuity product sales is a result of broad growth across the industry,” added Giesing. “Reports in the second quarter that the Federal Reserve was expected to slow interest rate hikes likely prompted investors who had been sitting on the fence to lock in the favorable rate of returns offered.”
Fixed-rate deferred (FRD) annuity sales fell from a record high $41.5 billion set in the first quarter to $31.7 billion the Q2—a 24% drop but 10% higher than second quarter 2022 results. Year-to-date, FRD sales totaled $73.2 billion, up 64%.
Traditional VA sales came in at $13.6 billion in the second quarter, down 18% from second Q2 2022 results. Year-to-date, traditional annuity sales totaled $26.4 billion, falling 25% compared with the same period in 2022. While economic conditions are improving for traditional VA products, with the slow start to the year, LIMRA said it is forecasting sales growth in this category to be flat in 2023.
SEE ALSO:
- American Interest in Adding Annuities to 401(k)s Still Rising
- Brighthouse Releases Fixed Indexed Annuity Suite
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.