3Q sales of fixed indexed annuities hit record $8.7B

A combination of equity market volatility and slumping interest rates pushed sales of fixed indexed annuities in the third quarter to a new high, according to data from LIMRA and AnnuitySpecs.com.

Third-quarter sales of fixed indexed annuities hit a record-breaking $8.7 billion, a 16% increase from the same period of last year.

Allianz Life Insurance Company of North America maintained its position as the top seller of fixed indexed annuities, with a market share of 21%, according to Annuity Specs.com. Allianz’s top-selling MasterDex X indexed annuity helped the company keep its top ranking.

Aviva USA finished second, followed by American Equity Investment Life Insurance Co., Lincoln National Corp. and ING Groep NV, according to data from Annuity Specs.com.

The increase in fixed indexed annuity sales comes at a time when low interest rates are dampening the returns insurers get on fixed-income investments for indexed annuities and other insurance products. Low interest rates also make fixed annuities less profitable for insurance companies.

Some insurers have pulled back on their production of fixed indexed annuities, including Dearborn National, which exited the fixed and fixed-indexed-annuity markets in July, and Transamerica Corp., which last month said it would cease sales of fixed annuities through insurance brokers.

After the financial crisis of 2008, clients flocked to the safety of indexed annuities. In response, some carriers deliberately slowed sales out of concern that too much new business would strain their capital.

Joseph Montminy, assistant vice president for LIMRA’s annuity research, said he doesn’t see a similar pullback on sales this time around.

“Within the indexed-annuity market, there will be more companies entering the market and more product development,” he said.

Indexed-universal-life sales were also up in the third quarter, reaching $165.6 million, a gain of 27% from the year-earlier period.

Pacific Life Insurance Co. bumped Aviva as the top seller of indexed universal life; Aviva finished second. Minnesota Life Insurance Co., AEGON NV and National Life Group rounded out the top five sellers. Pacific Life’s Pacific Indexed Accumulator III was the top-selling indexed life insurance product during the third quarter.

E-mail Darla Mercado at [email protected].