Sales Rebound as Industry and Consumers Adapt to COVID-19 Environment

WASHINGTON, D.C. – Sales of fixed and variable annuities were $53.5 billion in the third quarter of 2020, an increase of 13.9 percent from second quarter 2020 sales of $46.9 billion, according to the Insured Retirement Institute (IRI), which today announced final third-quarter 2020 market data for the U.S. annuity industry based on data reported by Beacon Annuity Solutions and Morningstar, Inc. 
 
While sales have not recovered to 2019 levels, the second quarter’s increases were significant across almost all annuity product lines. Total fixed annuity sales rose 13.7 percent to $30.2 billion compared to $26.5 billion in the second quarter of 2020. Variable annuity sales were 14.1 percent higher, at $23.3 billion compared to $20.4 billion in the second quarter.
 
Book value fixed annuity sales fell slightly while market value adjusted (MVA) annuities saw a huge increase as investors sought higher yields in a historically low-interest rate environment. Book value sales fell 2.3 percent to $7.4 billion from second quarter sales of $7.6 billion, while MVA sales rose 50.7 percent to $7.8 billion from $5.2 billion. Fixed indexed annuity sales rose 9.4% to $13.2 billion from second quarter sales of $12.1 billion. Income annuity sales rose slightly, up 3.0 percent over the second quarter.
 
Sales of variable annuities other than structured products (variable products that use index options to provide both upside potential and downside protection) rose 7.4 percent to $17.1 billion from second quarter sales of $15.9 billion. Sales of structured annuities, also known as Registered Indexed Linked Annuities, or RILAs, rose 37.5 percent to $6.2 billion from second quarter sales of $4.5 billion.
 
In the fixed market, $15.6 billion of sales were in qualified plans, and $14.6 billion were in non-qualified. Within variable annuity sales, $15.5 billion were in qualified, and $7.8 billion were in non-qualified.
 
According to Morningstar, variable annuity net assets rose 3.5 percent to $1,952.3 billion from $1,887.1 billion at the end of the second quarter as markets continued to recover from the correction precipitated by COVID-19. Assets in equity funds increase 6.1 percent in the third quarter, while allocation funds rose 3.8 percent. Net asset flows in variable annuities were -$18.0 billion in the third quarter, representing greater net outflows than were seen in the second quarter but trending lower than 2019 levels.

Click here for tables providing a detailed breakdown of annual and quarterly sales by annuity type and variable annuity assets by investment category.

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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, 2020. The company has operations in 27 countries.

About Beacon Annuity Solutions: Beacon Annuity Solutions 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 over 15 years 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 is accessible to hundreds of financial institutions and thousands of advisors.

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the entire supply chain of insured retirement strategies, including life insurers, asset managers, and distributors such as broker-dealers, banks, and marketing organizations. IRI members account for 90 percent of annuity assets in the U.S., include the top ten distributors of annuities ranked by assets under management, and are represented by financial professionals serving millions of Americans. IRI champions retirement security for all through leadership in advocacy, awareness, research, and the advancement of digital solutions within a collaborative industry community.  Learn more at www.irionline.org.