Economic conditions, income needs drive big annuity sales, LIMRA says
Strong economic conditions and a growing awareness of the power of guaranteed income continued to drive record-setting annuity sales through the third quarter, LIMRA reported.
Total annuity sales increased 29% year over year to $114.6 billion in Q3, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey. This is the 16th consecutive quarter of growth for the U.S. market and just shy of the quarterly record set in the fourth quarter 2023.
“Even with the potential of additional interest rate cuts, LIMRA expects fixed annuity products to outperform prior sales results driving overall sales to set new records in 2024,” said Bryan Hodgens, senior vice president and head of LIMRA research.
In the first nine months of 2024, total annuity sales increased 23% to $331.2 billion. Annuity sales previously set a record for the first six months of the year, LIMRA said.
LIMRA broke down the sales landscape for each product category:
Fixed-rate deferred
Fixed-rate deferred annuity sales were $40.7 billion in the third quarter, an 18% increase from third-quarter 2023 results. Year to date, FRD sales totaled $124.4 billion, up 17%.
“FRD sales remained strong in the third quarter, likely bolstered by elevated market volatility in July and August and the expected interest rate cut in September,” said Hodgens. “Should there be additional rate cuts, we would expect FRD sales growth to moderate but there is a significant amount in FRD contracts coming out of surrender this year and LIMRA expects a portion of those assets to be reinvested in FRD products resulting in another strong year for FRD sales.”
Registered index-linked
For the sixth consecutive quarter, registered index-linked annuity (RILA) sales set a new quarterly record, totaling $17.3 billion in the third quarter of 2024, growing 37% from the prior year. YTD, RILA sales were $48.2 billion, 40% higher than the same period in 2023
“Since the beginning of the year, various carriers have introduced at least seven new RILA products into the market while others have enhanced existing products, due to high interest from investors,” Hodgens notes. “LIMRA is forecasting RILA sales to have another record-breaking year in 2024 and continue to grow through 2025.”
Fixed indexed
This was yet another record-high quarter for fixed-indexed annuity (FIA) sales. FIA sales were $34.9 billion in the third quarter, up 54% from the prior year’s results. To put this into perspective, FIA sales were $17.1 billion just three years ago, half of the sales in the third quarter of 2024. YTD, FIA sales increased 33% to $94.2 billion.
“Over the past several years in the face of economic uncertainty, our research showed more consumer interest in financial solutions that offer downside protection and upside growth opportunity, which FIAs uniquely offer,” said Hodgens. “FIA sales will undoubtedly surpass the record sales results set in 2023, and LIMRA expects strong sales through 2025.”
Income annuity
While the interest rate cut in September had little impact on income annuity sales in the third quarter, the expectation of potential cuts likely boosted sales in the second and third quarters. Single premium immediate annuity (SPIA) sales were $3.4 billion in the third quarter, 17% higher than the prior year’s results. In the first nine months of 2024, SPIA sales jumped 7% to $10.4 billion.
Deferred income annuity (DIA) sales were $1.3 billion, a 40% jump from sales in the third quarter 2023. DIA sales grew 33% to $3.8 billion in the first nine months of the year.
Traditional variable
Traditional variable annuity (VA) sales continued to post year-over-year gains in the third quarter. Traditional VA sales were $14.9 billion in the third quarter, up 14% from third quarter 2023 results. YTD, traditional VA sales totaled $44 billion, a 12% gain year over year.
Preliminary third-quarter 2024 annuity industry estimates are based on monthly reporting and represent 83% of the total market. LIMRA’s Fact Tank summarizes the results.
Third-quarter 2024 top 20 rankings of total, variable and fixed annuity carriers will be available in mid-November, following the last of the earnings calls for the participating carriers, LIMRA said.
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