Annuity sales smash records in final Q2 count: Limra

Total U.S. annuity sales rose 16% to $79.4 billion in the second quarter, nearly the exact opposite of the S&P 500's return.

Annuity sales soared to new records in the second quarter as consumers continued to seek safety amid a vicious market sell-off.

Total U.S. annuity sales increased 16% to $79.4 billion in the second quarter, nearly the exact inverse of the S&P 500 Index’s return for the same period, according to Limra. Last month, Limra reported preliminary U.S. annuity sales of $77.5 billion for the second quarter.

Limra’s report showed fixed-rate deferred and registered index-linked sales hit all-time records for the quarter. Meanwhile, fixed index annuity sales fell just shy of a record quarter.

“All fixed products showed positive growth as consumers looked for safety from the volatile equity markets,” Todd Giesing, Limra’s assistant vice president for annuity research, said in a statement.

Giesing added that banks and full-service national broker-dealers were the driving forces behind this record-setting growth, as “overall annuity sales through banks grew 48% and sales through full-service national broker-dealers were up 55% for the quarter.”

“The combination of very attractive rates in fixed annuity products and the ongoing desire of investors for portfolio protection has been driving annuity sales. I expect this is just the beginning of a very long-term trend,” said David Lau, founder and CEO at DPL Financial Partners.

Fixed rate deferred sales were the big winner, with a total of $28.7 billion in the second quarter, 79% higher than the the same quarter the previous year, according to Limra. Fixed-rate deferred annuity sales totaled $44.6 billion during the first half of 2022, a 46% increase compared with the same period in 2021.

New York Life led fixed rate deferred annuity sales with $7.7 billion, followed by Massachusetts Mutual Life at $4.6 billion and Western Southern Group at $4.2 billion, according to Limra.

Elsewhere, registered index-linked annuity sales saw the highest quarter ever in the second quarter, up 8% to $10.8 billion. RILA sales, which now make up 40% of overall variable annuity sales, totaled $20.4 billion in the first half of 2022, a healthy 6% higher than the previous year.

At $19.7 billion, fixed index annuity sales also had an impressive second quarter, up 19% year-over-year and 20% year-to-date.

“Low rates on savings accounts and CDs are making fixed-rate annuities the most attractive low-risk investment for investors looking for a place to park cash, so it’s no surprise to see continued growth from these products. A reduced appetite for investment risk is also driving consumers demand annuity products that offer structured returns such as RILAs and protection from losses offered by FIAs,” said Michael Finke, professor at the American College of Financial Services.

On the flip side, traditional variable annuity sales dropped 27% to $16.5 billion in the second quarter, the lowest quarterly results since the fourth quarter of 1995 and down 20% so far for the year.