Fixed index annuity sales and variable annuity assets hit record quarterly highs according to the Insured Retirement Institute (IRI), which announced third-quarter market data for the annuity industry based on data reported by Beacon Research and Morningstar, Inc.
Total Annuity Sales were $54.9 billion, a 2 percent decrease from sales of $56 billion during the second quarter of 2018. However, they were 20 percent higher when compared with the same period last year, which at that time were of $45.8 billion. Year-to-date total annuity sales were $159.3 billion, a 7.1 percent increase versus 2017 third quarter year-to-date sales of $148.8 billion.
Fixed Annuity Sales were $31.8 billion for the third quarter, which were flat compared to the second quarter, and a 40.9 percent increase over 2017 third-quarter sales of $22.6 billion.
Variable Annuity Sales were $23 billion, 10.1 percent higher versus 2017 third quarter VA sales of $20.9 billion.
“While sales dipped a bit in the third quarter, we believe annuity sales will continue to improve given the reduction in disruption and uncertainty following the demise of the DOL fiduciary rule last spring,” IRI President and CEO Cathy Weatherford said in a statement. “We expect fourth quarter sales to remain strong and continue into 2019. Variable annuities also should rebound as Americans perceive a greater
“Fixed indexed annuities continue to lead the charge, reaching yet another record levels in the third quarter,” Beacon Research CEO Jeremy Alexander added, “and we expect all fixed annuity product types to continue showing robust growth in 2019 in an investment environment that is likely to be marked by higher interest rates and increased market volatility.”
According to Morningstar, variable annuity net assets rose in the third quarter as the bull market in equities continued to drive higher valuations in subaccount assets.
“Strong market performance pushed assets under management past $2 trillion, reaching a new all-time high,” Michael Manetta, Senior Quantitative Analyst at Morningstar, concluded. “And while we still see weakness in VA sales, levels are recovering from record lows reached last year, and sales should continue to improve in 2019 as rising interest rates have a positive effect on lifetime income benefit features and insurer risk capacity.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
