The first quarter of 2023 experienced the highest quarterly annuity sales ever recorded, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey.
Following record-high sales in 2022, total first quarter annuity sales were $92.9 billion, a 47% increase from the prior year.
“Market conditions continue to drive investor demand for annuities. Every major fixed annuity product line experienced at least double-digit, year-over-year (YOY) growth,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Despite expectations that interest rates will level off, LIMRA is forecasting total annuity sales in 2023 to exceed $300 billion for the second consecutive year.”
Fixed-rate deferred (FRD) annuity sales were $40.9 billion in the first quarter, 157% higher than the first quarter of 2022. For the fourth consecutive quarter, FRD sales have marked record sales and now represent 44% of the total annuity market. To put this into perspective, FRD annuity sales represented just 18% of the total U.S. annuity market in the first quarter of 2020.
“On average, FRD annuity crediting rates continue to outperform CD rates, making these products very attractive to conservative investors,” said Giesing. “LIMRA anticipates FRD products to have strong sales this year even though interest rates are expected to fall in the second half of 2023. While we don’t expect FRD sales to match the record set in 2022, LIMRA is forecasting sales to be above $100 billion in 2023.”
Fixed-indexed annuity (FIA) sales also had a record-breaking quarter. FIA sales were $23.1 billion, up 42% from first quarter 2022 results and 4% higher than the record set in the fourth quarter of 2022.
“Economic conditions remain favorable for FIA products and this is forecasted to continue throughout the year,” said Giesing. “LIMRA is predicting FIA sales to grow as much as 10% in 2023, as investors continue to seek out solutions with a balance of protection and growth.”
The income annuity market marked its highest quarterly sales ever, topping $4.1 billion. Single-premium immediate annuity sales were $3.3 billion in the first quarter, 120% higher than prior year. Deferred-income annuity sales jumped 125% YOY to $820 million in the first quarter. With investors look to lock in favorable payout rates before they begin to fall, LIMRA expects the strong sales in the first half of the year to drive income annuity sales to grow at least 15% in 2023.
Traditional variable annuity (VA) sales continue to slide. Traditional VA sales were $12.9 billion in the first quarter, down 30% from first quarter 2022 results. With market volatility expected to remain high, LIMRA is forecasting sales growth in this category to be flat in 2023.
Registered index-linked annuity (RILA) sales totaled $10.4 billion in the first quarter of 2023, up 8% from the prior year. RILA’s value proposition will continue to attract investors who are seeking a greater return on investment and are willing to accept some of the downside risks. LIMRA is predicting RILA sales to have another record-breaking year in 2023, likely growing at least 10%.
Preliminary first quarter 2023 annuity industry estimates are based on monthly reporting, representing 83% of the total market. A summary of the results can be found in LIMRA’s Fact Tank.
First quarter 2023 top 20 rankings of total, variable and fixed annuity writers will be available in mid-May, following the last of the earnings calls for the participating carriers.