IRI ISSUES SECOND QUARTER 2019 ANNUITY SALES REPORT

Posted on September 19, 2019

Strong Growth in Variable and Fixed Indexed Products

WASHINGTON, D.C. – Overall annuity sales rose 5.2 percent in the second quarter of 2019, with combined sales of fixed and variable annuities totaling $60.7 billion as compared to sales of $57.7 billion in the first quarter of 2019, according to the Insured Retirement Institute (IRI), which today announced final Q2 2019 market data for the U.S. annuity industry based on data reported by Beacon Research and Morningstar, Inc. Sales were also higher than year ago levels, up 6.7 percent from total annuity sales of $56.9 billion in the second quarter of 2018.

Total annuity sales

  • $60.7 billion - industry-wide annuity sales in the second quarter of 2019
    • 5.2 increase from sales of $57.7 billion in the first quarter of 2019
    • 6.7 percent higher than second quarter 2018 sales of $56.9 billion

Fixed Annuity Sales

  • $35.7 billion – 2019 second quarter fixed annuity sales
    • 0.3 percent decrease from first quarter sales of $35.8 billion
    • 11.9 percent higher than 2018 second quarter sales of $31.9 billion

Variable annuity sales1

  • $25.0 billion – 2019 second quarter variable annuity sales
    • Up 14.2 percent versus 2019 first quarter sales of $21.9 billion
    • Flat versus 2018 second quarter VA sales of $25.0 billion

“Annuity sales appear to be on an upswing, driven by consumer need and a growing awareness of the importance of allocating a portion of savings to annuity products, which can guarantee lifetime income and protect against market downturns," said IRI President and CEO Wayne Chopus.

According to Beacon Research, fixed annuity sales continue their long-term upward trend, albeit with some product types showing lower sales versus the fourth quarter of 2018.

  • $20.0 billion – fixed indexed annuity sales reach a new high-water mark
    • 10.5 percent increase versus first quarter 2019 sales of $18.1 billion
    • 13 percent higher than 2018 second quarter sales of $17.7 billion
  • $7.2 billion - Book value annuity sales
    • Book value sales fell 12.2 percent versus $8.2 billion in the first quarter of 2019
    • 2019 second quarter sales were 2.9 percent higher than 2018 second quarter sales of $7.0 billion
  • $5.2 billion - Market value adjusted (MVA) annuity sales
    • Second quarter MVA sales were down 16.1 percent from 2019 first quarter sales of $6.2 billion
    • MVA sales increased 20.9 percent versus second quarter 2018 sales of $4.3 billion
  • $3.3 billion - Income annuity sales
    • Income annuity sales were flat from first quarter sales of $3.3 billion
    • Sales were 13.8 percent higher than 2018 second quarter sales of $2.9 billion

For the entire fixed annuity market, there were approximately $20.7 billion in qualified sales and $15.0 billion in non-qualified sales during the second quarter of 2019.

“Fixed indexed annuity sales reached a new record high in the second quarter,” said Beacon Research CEO Jeremy Alexander. “As Americans increasingly seek higher potential yields, safety of principal, and the ability to create an income stream they cannot outlive, we expect fixed indexed sales to continue to grow and product issuers to innovate in order to deliver the protection, growth and income consumers demand.”

According to Morningstar, variable annuity net assets rose in the second quarter on continued positive returns in equity markets and a modest improvement in net cash flow.

  • $1.96 trillion – Variable annuity assets rose 1.5 percent from $1.93 trillion in the first quarter of 2019.
    • Allocation funds held $806.5 billion in VA assets, or 41.1 percent of the total, surpassing the $800 million mark for the first time.
    • Equity funds held $607.9 billion, or 31.0 percent of total VA assets.
    • Fixed accounts held $347.5 billion, or 17.7 percent.

Net asset flows in variable annuities were -$20.4 billion in the second, an improvement over outflows of $24.8 billion in the first quarter and $21.1 billion in the second quarter of 2018. Within the variable annuity market, there were $16.6 billion in qualified sales and $8.4 billion in non-qualified sales during the second quarter of 2019.

“Variable annuities saw a significant sales increase in the second quarter relative to Q1, with structured annuities experiencing rapid growth,” said Michael Manetta, Senior Quantitative Analyst at Morningstar. “Structured annuities, with returns based on index option strategies and a measure of downside protection, share some of the characteristics of fixed indexed annuities and appear to be resonating with investors. In fact, of the 13 VA products with sales of $500 million or more in the second quarter, the two fastest growing were structured products.”

1Both Morningstar and Beacon report sales for certain structured annuities filed with the SEC. In order to avoid confusion between fixed and variable and eliminate overstatement, sales data for these products is consolidated within the VA universe, resulting in sales totals that are slightly higher than sales reported by Morningstar, Inc. and slightly lower than sales reported by Beacon.

 

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About Morningstar, Inc.: Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of June 30, 2019. The company has operations in 27 countries.

About Beacon Research: Beacon Research is an independent research company and application service provider founded in 1997 and based in Northfield, Ill. Beacon tracks fixed and variable annuity features, rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed annuity sales at the product level, and the first to make a decade’s worth of sales information available to subscribers online at www.annuitymarketstudy.com. Beacon lowers compliance risk and increases fixed annuity sales with 100% carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep websites of banks, TPMs, broker-dealers and marketing organizations. Carriers and financial institutions use its systems at www.annuitynexus.com for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms. Directly and through licensees, Beacon information can be accessed by hundreds of financial institutions and thousands of advisors.

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of 40 organizations, and is the only association that represents the entire supply chain f insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.