Total Annuity Sales Jump 11%, Poised to Break Annual Record

In the year’s third quarter, total annuity sales reached $89.4 billion, representing a year-over-year increase of 11%, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey. In the first nine months of 2023, total annuity sales increased 21% to $270.6 billion.

“Equity markets rebounding in 2023, combined with a strong increase in interest rates, has allowed insurance companies to add additional value in their annuity offerings to investors,” Todd Giesing, LIMRA’s assistant vice president of annuity research, said in a statement. “LIMRA expects 2023 sales will surpass the record sales set in 2022.”

The sales run comes even as the White House and Department of Labor announced Tuesday proposals designed to bring more fiduciary requirements to annuity sales. Based on a fact sheet distributed by the DOL, the proposal seeks to expand the DOL’s jurisdiction under the Employee Retirement Income Security Act to include annuity recommendations and rollovers to individual retirement accounts.

LIMRA stated via email it does not comment about proposed regulations because it doesn’t fall within the scope of its mission.

Deferred Income Up

Deferred income annuity sales were $950 million in Q3 of 2023, up 88% from sales in the same period of 2022. In the first nine months of the year, DIA sales reached $2.8 billion, a 104% jump from the beginning of the year.

“Income annuities will hit record levels in 2023, with sales in this category expected to exceed $16 billion for the year,” said Giesing.

Fixed-rate deferred annuity sales were $34.4 billion in Q3, a 13% increase from the prior quarter and 15% higher than Q3 of 2022. Year-to-date, FRD sales totaled $106.4 billion, up 43%.

“While the average FRD annuity crediting rates continue to outperform CD rates, the gap has diminished. Investors—feeling more confident in the economy—are shifting to RILAs and FIAs seeking the potential for greater returns,” Giesing said. “That said, with a significant amount in FRD contracts coming out of surrender this year, LIMRA expects a portion of those assets to be reinvested in FRD products, driving total FRD sales to another record year.”

RILA Annuities Also Surging

Registered index-linked annuities, which seek to capture market upside while protecting investors from drops, also hit a new quarterly sales record, totaling $12.6 billion in the third quarter, up 19% from 2022. From Q1 through Q3, RILA sales were $34.4 billion, up 11% from the same period in 2022. RILA sales are expected to have another record-breaking year in 2023, likely increasing at least 10%.

“Investors still seem focused on the value of protection and growth potential that RILAs offer,” Giesing noted.

In the third quarter, fixed-indexed annuity sales were $23.3 billion, 9% higher than the prior year’s results. FIA sales grew 25% to $71.7 billion year-to-date.

The sales reflect annuities sold outside of workplace retirement plans, but retirement plan providers continue to develop and push forward in-plan annuity options as a “pension-like” investment vehicle. In the Q3 PLANADVISER Top Retirement Adviser Pulse Survey released earlier in October, 60% of respondents said they occasionally talk about in-plan retirement income with clients, and another 12.5% said they always do. But within that group, many indicated they are only using them as a talking point while recommending other strategies for distribution.