Annuity sales in the U.S. grew for the 16th consecutive quarter, according to the latest Limra survey, and in some cases hit record numbers.
The Windsor, Conn.-based data tracker found that total annuity sales in the third quarter of 2024 increased 29% year-over-year to nearly $115 billion, just shy of the record set in the fourth quarter of last year. It’s the 16th quarter in a row of sales growth.
Every product line had double-digit sales growth during that time, the press release said.
“Favorable economic conditions and the growing need for guaranteed retirement income continue to propel strong annuity sales results this year,” said Bryan Hodgens, senior vice president and head of Limra research, in a statement.
One of the hottest selling annuity categories is registered index-linked annuities (RILAs). These are a type of variable annuity, which holds client accounts in mutual-fund like subaccounts; RILAs, however, add a degree of downside protection in return for limiting the upside growth potential. Clients can choose from a menu of subaccounts and various degrees of upside and downside potential.
In the most recent quarter, RILA sales set a new quarterly record of $17.3 billion, skyrocketing 37% from the corresponding period a year ago. This marks the sixth consecutive quarter of setting new sales records, the Limra statement said.
“Since the beginning of the year, various carriers have introduced at least seven new RILA products into the market while others have enhanced existing products, due to high interest from investors,” Hodgens said in the statement.
Nevertheless, it’s fixed annuities that are expected to drive overall sales going forward, he added.
Fixed annuities offer a preset payout that’s largely based on prevailing interest rates. The standout category among fixed annuities was fixed-index annuities (FIAs), which offer potential growth that’s tied to a market index such as the S&P 500. Their growth is capped, however, in exchange for complete downside protection. The account cannot lose value, which has proved a key draw for risk-averse savers.
In the most recent quarter, fixed-index annuity sales surged 54% from the previous year’s results to just shy of $35 billion. Three years ago, FIA sales amounted to only about $17 billion, less than half the current figure.
“Over the past several years, in the face of economic uncertainty, our research showed more consumer interest in financial solutions that offer downside protection and upside growth opportunity, which FIAs uniquely offer,” said Hodgens’ statement.
Other categories of fixed annuities also fared well, according to the survey. Quarterly sales of deferred-income annuities—which provide guaranteed retirement income at a future date whenever the annuitant turns on the spigot—leapt 40% year-over-year to more than $1.3 billion. Fixed-deferred annuities, which pay out a preset amount for a specified period, saw sales jump 18% in the quarter from the corresponding period a year ago, reaching nearly $41 billion. Single premium immediate annuities, which begin payouts right away for an initial lump-sum investment, generated sales that were 17% higher than in the third quarter of last year, surpassing $3 billion.
Some customers, Hodgens speculated, might have rushed to purchase fixed annuities to lock in rates before the Federal Reserve recently started slashing interest rates. Nevertheless, he anticipated continued strong sales.
Meanwhile, sales of traditional variable annuities, which tend to offer more volatile results because of their dependence on equity market performance, moved up 14% year-over-year to nearly $15 billion.