Total U.S. annuity sales soared in the second quarter to a record $68.2 billion, a 40% increase from last year, according to the Secure Retirement Institute’s U.S. individual annuity sales survey.
The results represent the largest sales total for any quarter other than the fourth quarter of 2008 during the Great Recession, SRI said. The institute also noted that total annuity sales in the first half of 2021 increased 23% from the previous year to $129.2 billion.
Todd Giesing, the assistant vice president of SRI Annuity Research, said the booming sales in the second quarter were a result of “strong economic conditions and consumer pent-up demand after more than a year of living with the uncertainty of the pandemic.” He said judging from early indicators, third quarter sales will be more in line with first quarter 2021 results, given the resurgence of the pandemic over the summer and falling interest rates.”
Sales of variable annuities jumped 55% from last year’s second quarter, rising to $32.7 billion. Total variable annuity sales year to date rose 33% to $62.7 billion, and sales in the first half of 2021 logged the highest sales totals since 2015, SRI said.
Driven by strong market growth and increased consumer interest in tax-deferred investment options, traditional variable annuity sales also grew 37% to $22.7 billion in the second quarter. Its year-to-date sales rose 15% to $43.5 billion.
Registered index-linked annuities continue to surge: Sales in the second quarter topped $10 billion, showing an increase of 121%, more than doubling 2020 second quarter sales. In the first half of 2021, sales for these products were $19.2 billion, up 104% from the previous year.
Giesing noted that while growth in the independent and national broker-dealer channels doubled, registered index-linked annuities sales this quarter also grew substantially by 183% in the career channel (where multi-line exclusive agents devote at least 75% of their time to selling one company's products), as more companies with career forces entered the market. This expansion in distribution will contribute to continued sales growth for this product, he said, adding that SRI is forecasting registered index-linked annuities sales to be between $35 billion and $40 billion in 2021.
Fixed-indexed annuity sales also had big gains, totaling $16.5 billion in the second quarter, a 38% jump from the previous year. Its year-to-date sales were $30 billion, up 6% over the first half of 2020. Giesing said fixed-index annuities benefited from an increase in interest rates in the second quarter, as companies were able to raise cap rates, making the product more attractive to investors.
As for the top-selling companies in total annuity sales, AIG secured the No. 1 spot with $9.7 billion, followed by Jackson National Life with $9.6 billion and New York Life with $8.2 billion.
AIG reclaimed the top spot after losing it to Jackson in 2019. In an email, Todd Solash, CEO of individual retirement and life insurance at AIG Life & Retirement, said: “Our broad position across products and channels, as well as our ability to respond to changing market conditions, continued to serve us well in the second quarter. Our retail annuity sales increased from first quarter levels, and we saw growth across our entire annuity offering.”