Annuity sales are still suffering, probably from the impact of the Department of Labor fiduciary rule, according to LIMRA Secure Retirement Institute’s “Fourth Quarter 2017 U.S. Individual Annuity Sales Survey.”
Total annuity sales for 2017 decreased 8 percent to $203.5 billion compared with 2016, the survey said.
After six consecutive quarters of decline, the fourth quarter results for total annuity sales for 2017 were flat at $50.8 billion when compared to this quarter last year.
“The implementation of the DOL fiduciary rule in 2017 had a significant impact on the individual annuity market,” Todd Giesing, director of annuity research at the LIMRA Secure Retirement Institute, said in a statement. “The impact to IRA annuity sales was much more pronounced than nonqualified annuity sales.”
U.S. variable annuity sales were $24.7 billion in the fourth quarter, down two percent compared with the fourth quarter of 2016. This was compounded by the fact that total variable annuity sales for 2017 were $95.6 billion, 9 percent lower than 2016. It marked the first time in almost 20 years that annual variable annuity sales fell below $100 billion, LIMRA said.
The only positive news was in structured annuities, where sales were up for the year by 25 percent to $9.2 billion compared to 2016, LIMRA said. Those investors were looking for investment return balanced by downside protection, said Giesing.
Total fixed-annuity sales for the year fell 8 percent to $107.9 billion. Despite this decline, annual fixed-annuity sales surpassed $100 billion for the third consecutive year, the first time this has occurred, LIMRA said.
Although fourth quarter results for indexed annuity sales were positive compared to the previous quarter and to fourth quarter 2016, the total for the year was down 5 percent to $57.6 billion. It is also the first year since 2009 that annual indexed annuity sales declined, LIMRA said.
“Sales of these products generally align with the 10-year treasury rate, yet that didn’t occur again this quarter," Giesing said. "People just seem to be looking for shorter-term investments, anticipating increases in interest rates in 2018.”