U.S. annuity sales rose in the second quarter to $67.9 billion, a 39% increase over the same period last year and the best performance in more than a decade, according to preliminary results from the Secure Retirement Institute (SRI) U.S. Individual Annuity Sales Survey.
Annuity sales, year-to-date, climbed to $129 billion, 23% higher than the prior year, SRI said.
Todd Giesing, assistant vice president at SRI Annuity Research, attributed the rebound in the annuity market to strong equity market gains and lower volatility, as well as rising interest rates. “We expected sales to improve as the country opened up and the economy normalized. There is significant pent up consumer demand for products providing tax-deferred investment growth and guaranteed income,” he said in a statement.
Geising noted that the last time quarterly annuity sales surpassed this level was fourth quarter 2008, during the Great Recession.
Sales of variable annuities (VA) reached $32.8 billion, up 55% from prior year. SRI said this was the highest quarterly VA sales in nearly six years. And in the first six months of this year, total annuity sales were $62.8 billion, 33% higher than the prior year.
Traditional VA product sales jumped 37% from second quarter last year to $22.7 billion. Traditional VA sales totaled $43.6 billion year-to-date, up 16%. SRI said sales were helped by strong market growth and low volatility.
Registered index-linked annuities (RILA), which had been enjoying strong sales, exceeded record level sales in the second quarter, to $10.1 billion, a 122% jump from second quarter 2020. SRI said RILA sales were $19.3 billion,105% higher than prior year in the first half of the year.
Giesing said RILA products are expected to lose steam in the second half of this year. “If interest rates improve, fixed-indexed annuities may become more attractive to investors who want greater principal protection,” he said.
Also posting impressive results were fixed-indexed annuity (FIA) sales, which grew 28% in the second quarter to $15.4 billion. Year to date, FIA sales were $28.9 billion, up 2% from prior year.
Giesing noted that the FIA market has not returned to the levels seen in 2019, but he said sales will continue to improve.
Fixed-rate deferred annuity sales were $16.1 billion in the second quarter, 26% higher than prior year results. SRI said this was the highest quarterly sales results for fixed-rate deferred annuities since second quarter 2009. In the first six months of 2021, fixed-rate deferred annuity sales totaled $30.7 billion.