Total U.S. annuity sales rose 4% to $63.6 billion, according to preliminary results from the Secure Retirement Institute’s U.S. Individual Annuity Sales Survey, with fixed products benefiting from increases in interest rate.
“First quarter annuity sales tend to be a bit slower. While sales in the first two months of 2022 were a little slow, annuity sales in March hit record highs,” said Todd Giesing, Assistant Vice President, SRI Annuity Research. “Rising interest rates and heightened market volatility changed the product mix this quarter, with fixed annuity products fueling overall growth.”
Total fixed annuity sales were $35.2 billion, up 14% from the first quarter of 2021. Double-digit growth in indexed fixed annuities and fixed rate deferred annuities brought overall sales back fixed annuities to pre-pandemic levels.
Fixed indexed annuity (FIA) sales were $16.3 billion, up 21% from the prior year. Sales of fixed-rate deferred annuities increased 10% in the first quarter, year-on-year, to $16 billion.
“AIFs and fixed-rate deferred products benefited from significant interest rate increases in the first quarter,” Giesing said. “In addition to an almost 5% decline in the stock market, investors sought the capital protection and steady growth that these products provide.”
Traditional variable annuity (VA) sales were $19.1 billion in the first quarter, down 8% year-over-year.
Registered index-linked annuity (RILA) sales were $9.3 billion. Although this is 2% more than in the first quarter of 2021, it reflects a decrease of 10% compared to the previous quarter.
“Market conditions in the first quarter made AIFs more attractive than RILAs. As a result, the remarkable growth RILA has experienced over the past three years has leveled off,” Giesing noted.
Immediate income annuity sales were $1.5 billion in the first quarter, level with the first quarter of 2021. Deferred income annuity sales fell 18% to $300 million in the first trimester.
“We’re finally starting to see increases in income annuity payout rates as interest rates improve,” Giesing said. “However, given that the Fed has signaled additional rate hikes later this year, we expect investors to wait to lock in rates, so selling will likely remain subdued in the second and third quarters.”
Preliminary annuity sector estimates for the first quarter of 2022 are based on monthly reports, representing 85% of the total market. A summary of the results can be found in LIMRA’s Fact Tank.
The 2021 Top 20 Total, Variable and Fixed Annuity Writer Rankings will be available in May, following the last of the earnings calls for participating carriers.