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Investors seeking protection drive third quarter sales of fixed-rate deferred and fixed indexed annuities

WINDSOR, Conn., Oct. 27, 2022—For the second consecutive quarter, annuity sales reached new heights. In the third quarter 2022, total annuity sales were $79.6 billion, a 27% jump from prior year results, according to preliminary results from LIMRA’s U.S. Individual Annuity Sales Survey.

“Continued equity market declines and rising interest rates drove investors to continue seeking protection and purchase fixed-rate deferred and fixed indexed annuities at record levels in the third quarter,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Our forecast suggests that protection products will continue to propel growth in the annuity market for the next several years.”

Total fixed-rate deferred annuity sales were $29.8 billion in the third quarter, 159% higher than third quarter 2021 sales. This is the best sales quarter for fixed-rate deferred annuities ever recorded. In the first nine months of 2022, fixed-rate deferred annuities totaled $74.4 billion, a 77% increase compared with the same period last year. LIMRA is projecting fixed-rate deferred annuity sales to near $100 billion by the end of 2022, which will exceed the previous annual high of $80.8 billion, set all the way back in 2002.

Third quarter fixed indexed annuity (FIA) sales were $21.4 billion, a 25% increase from prior year. This tops the previous quarterly sales record of $20 billion set in the second quarter 2019.  Year-to-date (YTD), FIA sales were $57.4 billion, a 22% increase from last year.

"Rising interest rates will allow insurers to improve crediting rates while protecting the principal investment from equity market volatility, making these products more attractive to investors for the foreseeable future,” noted Giesing. “As a result, LIMRA projects 2022 FIA sales to reach as high as $76 billion and increase each year through 2026.”

Registered index-linked annuity (RILA) sales improved 13% in the third quarter, to $10.5 billion. In the first nine months of 2022, RILA sales were $30.9 billion, 9% higher than prior year.

FIA’s growth has come at the expense of RILA product sales,” said Giesing. “After three years of more than 30% annual growth, LIMRA is projecting RILA sales to be flat or under 5% in 2022.

Traditional variable annuity (VA) sales continued to struggle. In the third quarter, traditional VA sales fell 37% to $13.7 billion, the lowest quarterly results since the third quarter of 1995. YTD, traditional VA sales totaled $48.5 billion, down 25% from the same period in 2021. LIMRA projects traditional VA sales to fall more than 20% in 2022 and not recover to 2021 sales levels ($86.6 billion) for more than five years.

Income annuities have rebounded to pre-pandemic levels. Single premium immediate annuity (SPIA) sales were $2.5 billion in the third quarter, a year-over-year increase of 58%. YTD, SPIA sales were $6.0 billion, 28% higher than the same period last year. In the third quarter, deferred income annuity (DIA) sales rose 18% to $600 million. YTD, DIA sales were $1.5 billion, up 3%. LIMRA forecasts income annuity sales to grow more than 10% in 2022 and steadily through 2026.

Preliminary third quarter 2022 annuity industry estimates are based on monthly reporting, representing 85% of the total market. A summary of the results can be found in LIMRA’s Fact Tank.

Third quarter 2022 top 20 rankings of total, variable and fixed annuity writers will be available in late November, following the last of the earnings calls for the participating carriers.

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