WINDSOR, Conn. — Total U.S. annuity sales dropped 7% in the first quarter, totaling $54.4 billion, according to LIMRA Secure Retirement Institute’s first quarter U.S. Individual Annuities Sales Survey, released on May 19.
Every major product line except indexed annuities and structured settlements experienced declines in the first quarter.
“Persistent low interest rates and market volatility in the first quarter had an impact on all product lines,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Research. “However, there may be a seasonal component to it as well. Our research shows the first quarter is traditionally a slow quarter for annuity sales. Total annuity sales have been lower in the first quarter than the prior quarter eight out of the last nine years.”
Variable annuity sales fell 5% in the first quarter, to $32.4 billion. The declines were felt broadly with 8 of the top 10 companies experiencing declines. This represents the lowest quarterly sales for VAs since the first quarter of 2010.
“Many of the top companies are still managing sales volumes closely, focusing on diversification of their VA GLB business,” noted Giesing.
The election rate for GLB riders when available was 77% in the first quarter, which is down from a record high of 90% back in the first quarter 2012.
Declining interest rates in the first quarter drove total fixed annuity sales to fall 8%, to $22 billion.
Sales of fixed rate deferred annuities (Book Value and MVA) dropped 24% in the first quarter, totaling $6.4 billion.
Indexed annuities increased 3% in the first quarter to $11.6 billion. This is the eighth consecutive quarter of increased sales. Indexed annuity guaranteed living benefits (GLBs) election rates crept up slightly, with 68% electing a GLB when available.
According to Wink’s Sales & Market Report, indexed annuity sales were greater this quarter than in any other first quarter in the history of the product line. The average agent commission on indexed annuities was 5.79%, down more than 0.3% from last quarter’s average.
1Q 2015 Top 10 Indexed Annuity Carriers, per Wink Sales & Market Report:
1. Allianz Life
2. American Equity Companies
3. Security Benefit Life
4. Great American Insurance Group
5. Athene USA
6. Fidelity & Guaranty Life
7. Midland National Life
8. American General Life Companies
10. Symetra Financial
• See also: Wink’s Sales & Market Report, 1Q 2015
SPIA’s sales dropped 20% for the quarter to $2.0 billion.
Deferred income annuity (DIAs) sales were $560 million in the first quarter, down 10% from the first quarter of 2014. This is the lowest quarterly sales since third quarter of 2013. LIMRA Secure Retirement Institute reports there are now 16 carriers offering DIAs, up from nine in 2013. In addition, there are six companies are now offering QLAC.
The 2015 first quarter Annuities Industry Estimates can be found in the updated Data Bank. To view the top twenty rankings of total, variable and fixed annuity writers for first quarter 2015, please visit 2015 First Quarter Annuity Rankings. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2005-2014.
LIMRA Secure Retirement Institute’s first quarter U.S. Individual Annuities Sales Survey represents data from 96% of the market.
LIMRA, a worldwide research, learning and development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 64 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.