Total annuity sales climb to $241.7 billion in 2019, a 3% increase over the previous year and the highest annual total since 2008, according to the Secure Retirement Institute Fourth Quarter U.S. Annuity Sales Survey.
Growth was driven by strong performance from variable annuities and fixed annuity sales, SRI said.
For the third consecutive quarter, VA sales recorded positive growth, rising to $26.8 billion in the fourth quarter, an 8% increase compared to the prior year. Annual sales in the category also increased 2% from 2018 to $101.9 billion.
Growth in the VA market was driven by registered index-linked annuity products (RILA), a new product, the report said. In the fourth quarter, RILA sales were $4.9 billion, 39% higher than the prior year., and represented 17% of the VA market.
Todd Giesing, director of annuity research at SRI, said the impact of RILA sales on the overall VA market is significant. “When you look at VA sales excluding RILAs, VA sales dropped 5% in 2019,” he explained, noting that one of the things that is driving the growth in the RILA market is guaranteed living benefits (GLB) riders. More than $400 million of fourth quarter RILA sales were with GLB riders, representing 8% of the total RILA market.
In 2019, RILA sales were $17.4 billion, up 55%.
The report noted that fee-based VAs sales dipped 5% from last year to a total of $3 billion, but they were up 5% to $850 million in the fourth quarter. This matches the record sales experienced in the second quarter 2018. Fee-based VAs represents 3% of the total VA market.
And while fixed annuity sales, which represented 58% of the total annuity market in 2019, have driven the overall growth for the annuity market over the past four years, falling interest rates in the third quarter dampened fixed product sales in the second half of the year, Giesing said. As a result, most fixed products experienced declines in the fourth quarter, pulling down total annuity sales results for the quarter.
Despite the fourth-quarter decrease in fixed annuity sales (down 18% to $30.8 billion), robust sales in the first half of 2019 boosted annual fixed annuity sales to exceed its previous sales record of $133.5 billion. In 2019, total fixed sales were $139.8 billion, up 5% from prior year.
Geising attributed the overall growth in the fixed market to continued growth in the fixed-indexed annuity market (FIA). FIA sales have increased 11 of the past 12 years, accounting for more than half of the fixed-annuity market sales, he said.