Total U.S. annuity sales soared last year, with all fixed annuity product lines reaching record highs, according to preliminary results from Limra’s U.S. Individual Annuity Sales Survey.
This marks the second consecutive record-breaking year for annuity sales, as total sales, led by fixed annuity sales, were $385 billion in 2023, 23% higher than the record set in 2022.
“Economic conditions and growing demand for protected investment growth propelled fixed annuity sales to a remarkable $286.2 billion, a 36% jump from the record sales set in 2022,” Bryan Hodgens, head of LIMRA research, said in a statement, noting that total annuity sales have never reached this level. “Despite equity markets climbing more than 20% in 2023, investors worried about a downturn. This sentiment, combined with strong interest rates, prompted investors to lock in crediting and payout rates offered in fixed annuity products,” Hodgens added.
Limra noted that total annuity sales hit new heights in the fourth quarter, rising by 29% over the previous year's Q4 to $115.3 billion. That was 23% higher than the record set in the first quarter 2023.
Fixed-rate deferred annuities had its best fourth-quarter sales, climbing to $58.5 billion, 52% higher than fourth quarter 2022 sales. Its sales in 2023 totaled $164.9 billion, up 46% from the 2022 annual high of $113 billion.
Also boasting a record year was fixed indexed annuity (FIA). Hodgens attributed its strong sales to insurers offering “very competitive crediting rates while protecting the principal investment from equity market volatility.” Sales totaled $95.6 billion, up 20% from the prior year. FIA sales in the fourth quarter jumped 10% over 2022 sales to $24.6 billion, Limra said.
Rising interest rates propelled income annuity product sales to a new annual record in 2023. Single premium immediate annuity (SPIA) sales, Limra said, were up 9% to $3.5 billion in the fourth quarter. SPIA sales set an annual sales record, jumping 43% to $13.2 billion.
Also, deferred income annuity (DIA) saw sales rise to $1.3 billion in the fourth quarter, an 81% increase from 2022 fourth-quarter sales. Its annual year-end sales nearly doubled at $4.1 billion, a 96% increase, Limra said.
Another bright spot was registered index-linked annuity (RILA) sales, which grew to $13 billion in the fourth quarter, a 29% jump from last fourth quarter. “This is the first time RILA product sales have surpassed traditional variable annuity sales,” Limra said, noting that sales hit $47.4 billion in 2023, a 15% jump over the prior year and a new all-time high for sales.
“The introduction of RILAs in recent years and expansion of FIAs have offered investors options to buy a product that provides upside investment potential with limited to no downside risk — a value proposition increasingly attractive to today’s investor,” said Hodgens.
One not-so-bright spot was traditional variable annuity (VA) sales, which had its lowest sales ever recorded for the quarter and the year, and that’s “despite the strong equity market growth in 2023” noted Limra. Its fourth quarter sales fell 3% year-over-year to $12.3 billion and total 2023 sales dropped 17% to $51.4 billion.