Fixed-index annuities are driving a turnaround in industrywide sales of the insurance products, thanks to the demise of the fiduciary rule and rising interest rates.
FIA sales hit a record in the second quarter, jumping 17% year-over-year to $17.6 billion and topping the prior record from the fourth quarter of 2015 by 12%, according to the LIMRA Secure Retirement Institute. The research organization
Annuity sales
With the rule
Growth in sales of FIAs boosted each of the top 10 issuers’ revenue by 10% or more over the first quarter, according to Todd Giesing, director of annuity research at LIMRA.
“Clearly, with the Department of Labor’s fiduciary rule vacated and the prospect of continued rising interest rates, demand for this product is high,” Giesing said in a statement.
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LIMRA predicts annuity sales could gain 5% to 10% in 2018.
June 11 -
The industry research organization LIMRA sees reasons for optimism despite flat overall sales figures in the first quarter.
May 24 -
Sales dropped by 8% last year, but LIMRA finds reason for optimism in 2018.
February 22
The largest firms’ combined VA and FA revenues hit a three-year low in 2017, but the products still make up a significant portion of their businesses.
Wink, a market research firm which also reports quarterly sales metrics, tracked a 20% upsurge year-over-year in sales of all non-variable products. Annuity issuers and distributors are ready “to get back in business,” Wink CEO Sheryl Moore said in a statement.
“The recent increases in rates, coupled with the regulatory reprieve, will result in a confluence of sales momentum to close out 2018 with record sales levels,” Moore said.
Sales of all types of annuities rose 10% year-over-year in the second quarter to $59.5 billion,
Jackson National Life Insurance ($9.1 billion), AIG Companies ($8.2 billion), New York Life ($7.4 billion), Lincoln Financial Group ($5.7 billion) and TIAA ($5.3 billion)
Fee-based products make up a rapidly expanding but small share of the market, with fee-based FIA sales of $67 million in the quarter representing less than one-half of 1% of total revenue from FIA contracts. Sales of commission-free VAs soared by 49% year-over-year to $850 million, or 3.3% of all VA purchases.