Facing unprecedented long-term market volatility in 2022, consumers sought the protection offered by fixed annuities, propelling a record-high $312.8 billion in total U.S. annuity sales.
According to LIMRA’s 2022 Individual Annuity Sales Survey (and updating preliminary figures released in late January), total 2022 annuity sales increased 23% over 2021 results and were 18% higher than the previous record of $265 billion set in 2008.
“The interest rate dip in December spurred investor demand looking to lock in the favorable rates before they dropped further,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “As a result, total fourth quarter annuity sales marked a new record of $89.4 billion, a 42% increase from the fourth quarter of 2021. LIMRA data show there was an 80% year-over-year increase in pending total annuity contracts in January 2023. LIMRA expects the sales momentum experienced in 2022 to continue and is forecasting a record-breaking first quarter 2023.”
In the fourth quarter, bank sales more than doubled (117%) to $21.8 billion. In 2022, bank sales were a record $73.7 billion, 69% higher than in 2021. This is the first time banks have led total annuity sales since 2004, accounting for 24% of the U.S. annuity market in 2022.
“Banks, which traditionally attract more conservative investors, drove the growth that resulted in record-high fixed-rate deferred (FRD) sales,” said Giesing. “Throughout 2022, short-term FRD crediting rates outpaced comparable CD rates, making them appealing to investors seeking guaranteed growth and protection.”
Fixed-rate deferred annuities
Fixed-rate deferred annuity sales were $38.4 billion in the fourth quarter, 249% higher than fourth-quarter 2021 sales. For the year, fixed-rate deferred annuities totaled $113 billion, more than double (113%) the sales in 2021. FRD sales represented 36% of the total individual U.S. annuity market. The record demand in December spilled into the new year. LIMRA research shows a 315% year-over-year increase in pending FRD contracts in January 2023, leading LIMRA to forecast record FRD sales in the first quarter of 2023.
Fixed indexed annuities
Fixed indexed annuity (FIA) sales also had a record quarter and year. In the fourth quarter, FIA sales were $22.3 billion, a 34% increase from the prior record set in the fourth quarter 2021. For the year, FIA sales were $79.8 billion, up 25% from 2021, and 9% higher than the record set in 2019.
Income annuity sales spiked in fourth quarter 2022 as fluctuating interest rates drove investors to lock in favorable payout rates. Single premium immediate annuity (SPIA) sales were $3.2 billion in the fourth quarter, a year-over-year increase of 88%. In 2022, SPIA sales were $9.2 billion, 44% higher than 2021 results. Deferred income annuity (DIA) sales jumped 67% to $720 million. For the year, DIA sales were $2.1 billion, up 13%. LIMRA forecasts income annuity sales to experience steady growth through 2026.
Registered index-linked annuities
Registered index-linked annuity (RILA) sales were $10.1 billion in the fourth quarter, down 2% from the fourth quarter 2021. Despite lower fourth-quarter results, total RILA sales reached $41.1 billion in 2022, 6% higher than prior year and a new all-time high for the product line’s sales.
Traditional variable annuity (VA) sales continued to tumble. In the fourth quarter, traditional VA sales fell 41% to $12.7 billion. In 2022, traditional VA sales totaled $61.8 billion, down 29% from 2021 results. Given the current economic forecast and competitive pressures, there is little expectation that sales will improve significantly over the next several years.
Fourth quarter 2022 annuities industry results are based on LIMRA’s quarterly annuity sales survey, which represents 89% of the total market.
New York Life top annuity writer of 2022
New York Life topped Athene Annuity & Life and Corebridge Financial to be recognized as the overall leading annuity writer in 2022.
Rounding out the top 10 were MassMutual, Equitable, Jackson National, Allianz Life, Lincoln Financial, Pacific Life and Nationwide.
While saying achieving the No. 1 position was not a stated goal for New York Life, Todd Taylor, Senior Vice President and Head of Retail Annuities at New York Life attributed the achievement to three main drivers: The company’s diversified strategy for both product and distribution; its AAA ratings and “unmatched financial strength,” and the company’s commitment to operational excellence.
“Together, these key drivers enabled us to help clients and advisors achieve security and peace of mind in retirement,” Taylor said in a statement regarding the LIMRA report.
“Looking ahead as we near the end of the first quarter, we are seeing the higher interest rate environment and ongoing economic uncertainty continuing to drive interest in fixed and income annuities as well as in protected accumulation solutions,” Taylor added.
Solutions offering growth with guarantees are especially important for those in the ‘red zone’ of retirement, Taylor continued, as these individuals need equity exposure to support accumulation needs but also the confidence to stay the course amid market volatility and mitigate sequence of returns risk.
“And we know that they work,” Taylor concluded. “In fact, clients who leverage variable solutions with guaranteed minimum accumulation benefit (GMAB) features hold roughly 15% more equity in their portfolios – even during periods of market shocks – translating to 80-85 basis points in extra yield.”
To view LIMRA’s top 20 rankings of total, variable and fixed annuity writers in 2022, see 2022 Total Annuity Rankings.