Total U.S. annuity sales hit a record-breaking $182.7 billion in the first half of 2023, jumping 27%, LIMRA Annuity Research reported today. This marks the highest sales ever recorded in the first six months of a year. First-quarter annuity sales also hit record highs, LIMRA said.
“Economic conditions—particularly equity market performance and interest rates—have shifted but continue to be favorable for the annuity market,” Todd Giesing, assistant vice president at LIMRA Annuity Research, said in a statement.
Registered indexed-linked and fixed indexed annuity sales in particular set records “as investors seek solutions that offer greater upside growth potential while maintaining some level of downside protection,” Giesing added.
These indexed annuities usually offer a performance floor of zero—providing downside protection—but on the upside give investors the opportunity to earn capped market performance based on an index that can range from the S&P 500 to more exotic indices.
In the first half of 2023, RILA sales were $22 billion, 8% higher than the first six months of 2022.
RILA sales totaled $11.6 billion in the second quarter of 2023, up 8% from the prior year—the highest quarterly sales since RILAs were introduced.
LIMRA is predicting that RILA sales will set another record in 2023, with a projected increase of 10%.
Fixed-income annuities also set a sales record in the first half of 2023, jumping 35% to 48.5 billion. Second-quarter FIA sales were $25.4 billion, up 29% from 2022, the association said.
FIA investors were lured by “an appealing combination of investment growth with principal protection. With cap rates nearing or exceeding 10%, there are few investment options that can offer a higher potential guaranteed return with full principal protection,” Giesing noted. “Like RILAs, favorable economic conditions could push FIA sales beyond our expectations in 2023.”
The single-premium income annuity market also broke records, shooting up 93% in the first half of the year for sales of $6.8 billion. SPIAs also achieved their highest quarterly sales ever with a 68% jump, in sales topping $3.4 billion.
Deferred income annuity (DIA) sales reached a milestone in the first half of 2023, with sales skyrocketing 116% to $1.9 billion in sales. The product hit $1 billion in sales for the first time in a quarter, with sales more than doubling to $1.1 billion—a 108% increase over second quarter 2022 results, LIMRA reported.
“Reports in the second quarter that the Federal Reserve was expected to slow interest rate hikes likely prompted investors who had been sitting on the fence to lock in the favorable rate of returns offered by income annuity products,” Giesing said.
Meanwhile, year-to-date fixed-rate deferred (FRD) annuity sales totaled $73.2 billion, up 64% for the first half—the highest FRD sales ever recorded in a six-month period, LIMRA reported. In the second quarter, FRD sales were $31.7 billion, which was a 24% drop from the first quarter, but 10% higher than second quarter 2022 results.
FRD sales fell from the record high $41.5 billion set in the first quarter, to $31.7 billion, a 24% drop from prior quarter, but 10% higher than second quarter 2022 results.
The steady rise in the equity markets prompted a slight uptick in traditional variable annuity (VA) sales from the first quarter, but traditional VA sales remain far below the results from the 2022. Sales totaled $26.4 billion year-to-date for the year, falling 25% compared with the first half of 2022. LIMRA is forecasting flat sales for Vas in 2023.