US annuity sales reach record high in the first half of 2024

US annuity sales surged to $215.2 billion in the first half of 2024, marking a 19% increase over the previous year, according to preliminary data from LIMRA’s US Individual Annuity Sales Survey. This sets a new record for the first six months of a year since LIMRA began tracking sales in the 1980s.

In the second quarter alone, annuity sales reached $108.5 billion, reflecting a 25% year-over-year increase. This quarter marked the second-highest total ever recorded, narrowly missing the record set in the fourth quarter of 2023. All product lines, except fixed immediate annuities, posted double-digit gains.

“This time last year, LIMRA reported a record-shattering second quarter and first half of the year. Those results wane in comparison to this year’s results,” said Bryan Hodgens, senior vice president and head of LIMRA research. “Annuities have benefited from the favorable economic conditions and the Federal Reserve not cutting interest rates this year. We also believe demographic trends and a growing awareness of unique value proposition annuities offer have shifted the US annuity market post pandemic, resulting in 15 consecutive quarters of strong sales growth.”

Gains gather pace

Fixed indexed annuity (FIA) sales hit a new quarterly record, totaling $29.7 billion, a 17% increase from the previous year. Year-to-date (YTD), FIA sales reached $58.3 billion, up 20% year over year.

Registered index-linked annuities (RILAs) achieved record sales for the fifth consecutive quarter, with second-quarter sales reaching $16.2 billion, a 42% year-over-year increase. In the first half of 2024, RILA sales jumped 41% to $30.7 billion.

“For the third consecutive quarter, RILA sales have outpaced traditional variable annuity sales. More than a half dozen carriers have launched or enhanced their RILA products in the first half of the year. These product innovations are driving a more competitive landscape and signaling the RILA market still has significant growth potential. LIMRA is forecasting RILA sales to surpass $50 billion in 2024,” noted Hodgens.

Fixed-rate deferred annuity (FRD) sales totaled $40 billion in the second quarter, a 32% increase from the same period in 2023, but a 7% decrease from the first quarter of 2024. YTD, FRD sales amounted to $83.1 billion, up 15% year over year.

LIMRA’s data shows that two-thirds of fixed-rate deferred annuity (FRD) sales come from new money, not replacement contracts. As interest rates rose over the past two years, conservative investors moved their money into the market, finding FRD crediting rates more attractive than CD rates despite shrinking margins.

Traditional variable annuity (VA) sales improved in response to the S&P market growing nearly 10% in the second quarter. Traditional VA sales increased by 18% to $15.6 billion. YTD, traditional VA sales rose 12% to $29.3 billion.

Single premium immediate annuity (SPIA) sales fell 9% year-over-year to $3.1 billion in the second quarter, despite the Treasury’s 10-year interest rate averaging above 4.4%. In the first half of the year, SPIA sales dropped 2% to $6.7 billion.

Deferred income annuity (DIA) sales soared 62% to $1.7 billion in the second quarter. YTD, DIA sales jumped 53% to $2.9 billion.

Preliminary second-quarter 2024 annuity industry estimates are based on monthly reporting, according to LIMRA. A summary of the results is available in LIMRA’s Fact Tank. The top 20 rankings of total, variable, and fixed annuity writers for the first half of 2024 will be released in mid-August.