Total U.S. annuity sales jumped 26% from a year ago to $109.9 billion in the second quarter, with nearly all product lines experiencing double-digit growth, according to Limra.
Sales reached $216.6 billion in the first half of the year, a 20% increase from 2023 results and a six-month sales record, Limra said.
Guaranteed retirement income continues to be in high demand as more Americans reach the traditional retirement age of 65, Bryan Hodgens, senior vice president and head of Limra research, said in a statement. “As a result, annuity sales have experienced 15 consecutive quarters of strong growth and Limra is forecasting record sales in 2024,” he said.
The strong second-quarter performance was led by fixed indexed annuities (FIAs) and registered index-linked annuities (RILAs), both of which set quarterly sales records. FIA sales totaled $30.7 billion, 21% higher than the prior year. Sales were $59.3 billion, up 23% year over year.
RILAs have recorded gains for the fifth consecutive quarter. Sales in the second quarter were $16.3 billion, a 43% increase over the prior year, Limra said. In the first half of 2024, sales jumped 41% to $30.8 billion, driven by independent broker dealers, career agents and bank distribution logging double-digit growth, Limra said.
FIA and RILA sales are expected to continue to soar, Hodges said. To mitigate market volatility and high interest rates, he said, investors have turned to FIAs because they “want a solution that offers downside protection with upside growth potential. Regardless of possible rate cuts later this year, FIA sales should remain strong through 2024 and are expected to exceed the record set in 2023." As for RILAs, Hodgens said, Limra expects sales to surpass $50 billion in 2024.
Other product lines posting double-digit second-quarter growth included fixed-rate deferred annuity (FRD) sales, which jumped 33% higher than a year ago to $40.7 billion. Hodgens noted that “FRD crediting rates, on average, continue to outperform CD rates, making them an attractive, short-term solution for risk-adverse investors.”
Traditional variable annuities (VA), whose growth was driven by strong equity markets, saw sales increase 16% over last year’s second quarter to $15.4 billion, and up 11% year-to-date to $29.1 billion.
Deferred income annuity (DIA) sales also jumped 21% to $1.3 billion in the second quarter. Its sales year-to-date were $2.5 billion, an increase of 30%.
While single premium immediate annuity (SPIA) did not bring in double-digit sales in the second quarter, its recorded sales of $3.4 billion was on level with prior year results, Limra said, noting that sales rose 3% to $7 billion in the first six months of the year, and are on track to meet or exceed the record sales set in 2023.