Total annuity sales were $56.5 billion in the second quarter of 2013 — nine percent higher than the first quarter of 2013, but one percent below 2012 results, according to LIMRA’s second quarter 2013 U.S. Individual Annuities Sales survey. The survey represents data from 95 percent of the market.
“This quarter’s results are encouraging for the annuity industry — every product line improved from the first quarter of 2013,” says Joseph Montminy, assistant vice president, LIMRA Annuity Research. “Observing the economic improvements, including interest rate increases, we believe variable annuity sales have stabilized while fixed annuity sales will continue to improve for the remainder of the year.”
In the first six months of 2013, total annuity sales were down four percent to $108.2 billion. Variable annuity sales were one percent lower than they were in the second quarter of 2013, compared with the second quarter of 2012, totaling $38.2 billion. However, VA sales rebounded from the prior quarter, up eight percent. Year-to-date (YTD), VA sales totaled $73.7 billion, a three percent decline from prior year.
While election rates for VA GLB riders slipped two percentage points to 82 percent in the second quarter, it still remains a significant driver of VA sales growth. GLBs were offered in 89 percent of VAs in the second quarter. Deferred income annuities (DIAs) surpassed $0.5 billion for the first time, reaching $535 million in the second quarter of 2013, 155 percent higher than in the second quarter of 2012. YTD, DIA sales grew 151 percent to nearly $1 billion. DIA sales are on pace to reach $2 billion by the end of the year — doubling 2012 results.
Fixed annuity sales reached $18.3 billion in the second quarter, down one percent compared with prior year. Yet, it is important to note that this is 13 percent higher than the first three months of the year. In the first half of 2013, fixed annuities fell six percent, totaling $34.5 billion.
Rise in quarterly indexed annuities
For the first time ever, quarterly indexed annuities topped $9 billion. Second-quarter sales were up five percent, compared to last year. YTD, indexed annuities improved one percent, to reach $16.8 billion. Bank market share of indexed annuities was 12 percent in the second quarter, triple its market share of four percent in 2008.
Guaranteed lifetime withdraw benefit (GLWB) riders continue to help propel indexed annuity sales. Indexed GLB rider election rates also hit an all-time high of 76 percent in the second quarter of 2013.
Single premium immediate annuity (SPIA) sales were flat in the second quarter of 2013, compared to one year ago, to reach $1.9 billion. This is 12 percent higher than results in the first quarter of the year. In the first six months of 2013, SPIA sales totaled $3.6 billion, three percent lower than they were in 2012.
For more information, visit LIMRA at www.limra.com.
By Ayo Mseka