Total U.S. Annuity Sales Improve Three Percent in 2014

Record sales in indexed annuities and income annuities drive growth

WINDSOR, Conn., February 23, 2015 (Updated March 12, 2015) —Total U.S. annuity sales in 2014 rose 3 percent to $235.8 billion, thanks to record annual sales in indexed and income annuities, according to LIMRA Secure Retirement Institute Fourth Quarter 2014 U.S. Annuity Sales Survey.

“Despite interest rates falling nearly a percentage point in 2014, indexed annuities and income annuity sales — fixed immediate and deferred income — topped record sales levels,” said Todd Giesing, senior business analyst, LIMRA Secure Retirement Institute. “The performance of these products certainly propelled overall annuity sales to increase in 2014.”

Total annuity sales in the fourth quarter were $58.1 billion, falling 6 percent compared with results in the fourth quarter of 2013.

Indexed annuity sales reached $48.2 billion in 2014 — $9.0 billion higher than prior year — a 23 percent increase from 2013. For the first time, indexed annuities held more than 50 percent market share of all fixed annuity sales in 2014. Indexed annuity sales were $12.2 billion in the fourth quarter, an improvement of 3 percent compared with fourth quarter 2013 results.

Immediate income annuity sales jumped 17 percent in 2014, totaling $9.7 billion. In the fourth quarter, immediate income annuity sales dropped 12 percent compared with prior year to reach $2.3 billion. LIMRA Secure Retirement Institute analysts attribute the fourth quarter decline to falling interest rates.

“In the run up to the fourth quarter of 2013 interest rates were trending upward, reaching over 3 percent at year-end,” Giesing noted. “Quite the opposite occurred in the fourth quarter of 2014, where interest rates dropped a third of point, falling to 2.17 percent at the end of 2014.”

Deferred income annuities (DIAs) experienced record growth in 2014, reaching $2.7 billion. This was 22 percent higher than sales in 2013. Like immediate annuities, DIAs suffered from falling interest rates in the fourth quarter. DIA sales were $680 million in the fourth quarter 2014, 4 percent lower than fourth quarter 2013 results.

Sales of fixed-rate deferred annuities (Book Value and MVA) were 1 percent higher in 2014, compared with 2013 sales, to reach $29.7 billion. Fixed-rate deferred annuity sales fell 14 percent in the fourth quarter, to reach $7.3 billion.

Overall fixed annuity sales were $95.7 billion in 2014, improving 13 percent compared with 2013. In the fourth quarter, total fixed annuities fell 5 percent, to reach $23.9 billion.

Variable annuity (VA) sales fell 4 percent in 2014, totaling $140.1 billion. This represents the lowest annual VA sales since 2009. VA sales were $34.2 billion in the fourth quarter, down 6 percent from prior year.

The fourth quarter Annuities Industry Estimates can be found in the updated Fact Tank. To view variable, fixed and total annuity sales over the past 10 years, please visit Annuity Sales 2005-2014.

*Top twenty rankings of total, variable and fixed annuity writers for 2014 can be found here.

LIMRA Secure Retirement Institute's fourth quarter U.S. Individual Annuities Sales Survey represents data from 96 percent of the market.

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Contacts

Catherine Theroux, 860-285-7787, ctheroux@limra.com
Mark Morris, 860-285-7875, mmorris@limra.com

About LIMRA Secure Retirement Institute

LIMRA Secure Retirement Institute provides comprehensive, unbiased research and education about all aspects within the retirement industry to improve retirement readiness and promote retirement security. For more information, please visit www.secureretirementinstitute.com