Fixed-rate deferred annuity sales increased 66% in the third quarter 2013, compared with the third quarter 2012, according to LIMRA Secure Retirement Institute (SRI).
Overall, total annuity sales for the quarter increased to $59.4 billion, a 9% increase — the largest year-over-year growth since the second quarter 2011. For the first nine months of 2013, total annuity sales were $167.6 billion.
“In addition to the substantial growth experienced by fixed-rate deferred annuities, indexed annuities grew 15% in the third quarter to hit a new peak of $10 billion,” said Joseph Montminy, assistant vice president, LIMRA SRI Annuity Research. “This growth was driven by improvements in the interest rate environment, increasing demand for accumulation-type annuity products."
Total fixed annuity sales improved 31% in the third quarter over the prior year to reach $23.5 billion — a level they have not reached since the third quarter 2009. Year-to-date (YTD), fixed annuity sales rose 6%, totaling $58.0 billion.
Fixed-rate deferred annuity sales — Book Value and MVA — were $9.5 billion, the highest quarterly total since the second quarter 2011. YTD, fixed-rate deferred annuities sales improved 5%.
In the third quarter, market share for fixed-rate deferred annuities rose 10 percentage points to reach 40 percent of total fixed annuity sales.
For the first time, quarterly indexed annuities sales reached $10 billion — an increase of $1 billion from the prior quarter. Most of this increase over the second quarter came from accumulation-type products. YTD, indexed annuities sales increased 6%, to reach $26.8 billion.
“We are seeing broader acceptance of indexed annuities across the different distribution channels,” noted Montminy. Bank sales of indexed annuities expanded from 9% market share one year ago to 15% market share this quarter while independent B-D market share grew from 3% to 5% year over year.
Variable annuity (VA) sales declined 2% in the third quarter, to reach $35.9 billion. YTD, VA sales were $109.6 billion, falling 2% from the prior year.
Election rates for VA guaranteed living benefit (GLB) riders were 81% (when available) in the third quarter, down one percentage point from the second quarter of 2013.
Deferred income annuities (DIAs) reached $555 million in the third quarter, an increase of 106% compared to the prior year. In the first nine months of 2013, DIA sales grew 132% to $1.5 billion and are on pace to surpass $2 billion by the end of the year, which would double 2012 results.
Fixed immediate annuity sales were up 5% in the third quarter to reach $2.1 billion. YTD, fixed immediate annuity sales totaled $5.7 billion, matching sales from one year ago.
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