Investors purchased fixed-rate deferred annuities at record-level in the second quarter, boosting total U.S. annuity sales by 22% to $77.5 billion and beating the a sales record set in fourth quarter 2008 by $9 billion, according to LIMRA’s U.S. Individual Annuity Sales Survey.

The rush to purchase fixed-rate deferred annuities is due to continued equity market declines and rising interest rates, said Todd Giesing, LIMRA's assistant vice president for annuity research. “Our research shows fixed-rate deferred annuity manufacturers are, on average, offering interest rates more than four times that of a bank CD, which has made these products a tremendous value for investors looking for protection and growth potential."

Total fixed-rate deferred annuity sales recorded their best sales quarter, climbing to $28.2 billion, a 76% increase over second quarter 2021, LIMRA said. In the first six months of 2022, fixed-rate deferred annuities sales totaled $44.1 billion, a 44% increase compared with the same period last year.

Fixed-index annuity sales also recorded a strong second quarter, as sales reached $19.7 billion, up 19% from the prior year. Year-to-date sales were $36 billion, a 20% increase from last year.

As with fixed-rate deferred products, Giesing said, fixed-index products benefited from interest rate increases. “Coupled with a nearly 20% market decline, investors sought out principal protection and growth potential, which these products offer,” he said.

Sales of registered index-linked annuities (RILA), which consistently broke records over the past three years, saw a modest increase of 5% to $10.5 billion. In the first half, RILA sales were $20.1 billion, 5% higher than a year ago. 

“While RILA products offer protection against the significant market declines we witnessed in the first half of the year, the crediting rates are often linked to indices tied to equities and bonds, which have not fared as well under current market conditions,” noted Giesing.

Taking a hit in the second quarter were traditional variable annuity sales, which fell 32% to $15.4 billion, the lowest quarterly results since the fourth quarter of 1995. Variable annuity sales for the year totaled $33.9 billion, down 22% from the same period in 2021.