Higher Stock Prices and Worried Investors Boost Q2 Annuity Sales
Registered index-linked annuities and deferred income annuity sales sizzled, according to the latest LIMRA survey.
Rising stock prices, good rates and investors’ memories of past stock market woes helped insurers increase U.S. individual annuity sales 25%, year over year, to $109 billion in the second quarter of 2024.
Sales of registered index-linked annuities, or annuities with returns tied to the performance of entire stock indexes, rather than mutual fund-like baskets of stocks, climbed 42% from the year-ago period, according to new survey data from LIMRA.
Regulatory changes and the need for retiring baby boomers to convert retirement assets into streams of income led sales of deferred income annuities to soar 62%.
What It Means
Bryan Hodgens, a senior vice president at LIMRA, said relatively high interest rates and other favorable economic conditions have made annuities more attractive.
“We also believe demographic trends and a growing awareness of the unique value proposition annuities offer have shifted the U.S. annuity market post-pandemic,” Hodgens said.
Because of those trends, clients may be somewhat more open to including annuities in their portfolios.
Meanwhile, even though second-quarter account statements showed solid gains, the volatility that hit at the start of the pandemic and later during the U.K. bonds liquidity crisis continues to shape how clients see market risk.
“Investor interest in products that offer downside protection with upside growth potential remains high,” Hodgens said.
Clients’ increased awareness of risk may have led some to choose annuities over bare mutual funds.
Non-variable annuities can protect a nervous contract owner’s premium contributions, and the buffers and other options available with RILAs and traditional variable annuities can provide an adjustable level of account value protection.
The Policy Counts
LIMRA, a Windsor, Connecticut-based marketing services organization owned by life insurers and other financial services companies, bases its annuity sales reports on data from member insurers.
Here’s what happened to annuity sales for some of the types of products that LIMRA tracks between the second quarter of 2023 and the latest quarter of 2024.
- Deferred income annuities: $1.7 billion (up 62%)
- RILAs: $16 billion (up 42%)
- Variable annuities (other than indexed): $16 billion (up 18%)
- Fixed indexed annuities: $30 billion (up 17%)
- Fixed immediate annuities: $3.6 billion (down 9%)
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