Annuity Sales: The Good and Bad News

Despite a sour fourth quarter, total annuity sales reached $240.3 billion in 2011, according to LIMRA survey.

Insurance Networking News, February 16, 2012

Carrie Burns

Despite a poor fourth quarter, the year as a whole was positive for most annuity providers. According to LIMRA's fourth quarter 2011 U.S. Individual Annuities Sales survey, which represents data from 94 percent of the market, total annuity sales reached $240.3 billion in 2011.

Seeing increases for the year were variable annuities (up 13 percent to $159.3 billion) and fixed immediate annuity sales (up seven percent to $8.1 billion). Fixed annuity sales dropped one percent to $81 billion and market-value adjusted sales plunged 15 percent to $5.2 billion. Book-value sales were level with 2010 at $30.4 billion. Also flat were indexed annuities sales totaling $32.2 billion. However, in the fourth quarter—for the second consecutive quarter—indexed annuity sales outperformed sales of traditional fixed annuities (book-value and market-value adjusted), capturing 44 percent of the fixed annuity market.

With the exception of indexed annuities and fixed immediate annuities, the fourth quarter wasn’t kind to any of the product classes. Total annuity sales dropped slightly to $57.4 billion. And, after six consecutive quarters of positive growth when compared to the prior year, fourth quarter VA sales were flat. “The demographics of the U.S. population cannot be ignored. There are currently more than 42 million retirees in the United States and the number is expected to grow to 65 million by 2025,” said Joseph Montminy, LIMRA assistant VP, annuity research. “Many of these retirees need to establish a guaranteed income stream that immediate annuities can provide. We anticipate demand for this product will grow for many years to come.”

Editor’s Note: Check back with INN in early March for LIMRA’s list of the top 20 writers of overall total annuities, variable annuities and fixed annuities ranked by 2011 sales results.

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