Last year's unprecedented long-term market volatility prompted consumers to pay a record $312.8 billion for the protection offered by annuities, LIMRA reported Thursday. Total U.S. annuity sales in 2022 increased by 23% year over year and were 18% higher than the previous record of $265 billion set in 2008.
The increase was driven by $209.9 billion in fixed annuity sales, also a record.
"The interest rate dip in December spurred investor demand looking to lock in the favorable rates before they dropped further," Todd Giesing, assistant vice president of LIMRA Annuity Research, said in a statement. "As a result, total fourth quarter annuity sales marked a new record of $89.4 billion, a 42% increase from the fourth quarter of 2021."
Giesing noted that LIMRA data showed an 80% year-over-year increase in pending total annuity contracts in January. "LIMRA expects the sales momentum experienced in 2022 to continue and is forecasting a record-breaking first quarter 2023."
Bank sales grew in the fourth quarter by 117% to $21.8 billion. For the full year, bank sales hit a record $73.7 billion, 69% higher than the year before. In 2022, banks were the top annuity sales channel for the first time since 2004, making up 24% of the market.
"Banks, which traditionally attract more conservative investors, drove the growth that resulted in record-high fixed-rate deferred sales," Giesing said. "Throughout 2022, short-term FRD crediting rates outpaced comparable CD rates, making them appealing to investors seeking guaranteed growth and protection."
Fixed-Rate Deferred Sales Take Off
Fixed-rate deferred annuity sales in the fourth quarter came in at $38.4 billion, 249% higher than the same period in 2021. For the year, these annuities totaled $113 billion, more than double the sales in 2021.
