Sales of fixed and variable annuities increased by $56.7 billion in the first quarter, a 3.9% increase over fourth quarter 2020 sales, according to a new Insured Retirement Institute (IRI) report released today.
Overall variable annuities sales jumped to $29.2 billion in the first quarter from $27.0 billion in the fourth quarter of 2020, according to IRI, which uses Beacon Annuity Solutions and Morningstar data.
IRI President Wayne Chopus said he expects annuities sales to continue to rebound after a tough year because of the pandemic, with the industry helped by tailwinds from digital solutions and the “high potential” for more favorable retirement legislation from Congress.
“The future shows much promise if we remain focused and continue the hard work necessary to improve consumers’ access to retirement plans and lifetime income, and advance practical, digital solutions that will improve the advisor-client experience across the lifecycle of the annuity,” Chopus said in a state of the industry address earlier in June.
Sales of variable annuities other than registered index-linked annuities (structured variable products that use index options to provide both upside potential and downside protection) increased 7.5% to $20.0 billion from fourth-quarter sales of $18.6 billion. Structured annuities rose 9.2% to $9.2 billion from $8.4 billion in the fourth quarter of 2020, IRI reported.
Total fixed annuity sales, however, were nearly flat, falling 0.1% to $27.49 billion compared to $27.52 billion in the fourth quarter of 2020.
Book value (or traditional tax-deferred) fixed annuity sales increased by 20%, while market value adjusted annuity sales came in just 0.7% higher, IRI reported. Sales of fixed-indexed annuities fell 5.1% and income annuity sales saw the largest drop in the fixed category, falling 13.9% from fourth-quarter levels.
Non-qualified plan VA sales were up 10.9% quarter over quarter, while qualified sales only rose 6.3%, IRI said. Variable annuities posted $17.9 billion in qualified sales and $11.3 billion in non-qualified sales. In the fixed market, $14.4 billion of sales were in qualified plans and $13.1 billion were non-qualified.
According to Morningstar, variable annuity net assets were “virtually flat at $2,104.1 billion versus $2,105.8 billion in the fourth quarter.”
Equity funds, the second-largest asset class, were up 1.5% over the fourth quarter but were 45.8% higher than the first quarter of 2020, “reflecting the strong recovery from the COVID-induced drop last year,” IRI said. Net asset flows in variable annuities were $24.8 billion in the first quarter.