The good times just keep rolling for the US annuity space – at least that's if the latest data from Limra is any indication.
According to Limra’s preliminary third-quarter data released Tuesday, the US annuity market saw another robust quarter, with sales increasing 29 percent year over year to $114.6 billion.
That strong performance, landing just below the record set in late 2023, marks the 16th consecutive quarter of growth for annuities with double-digit percentage increases across the board, led by remarkable results for fixed indexed and registered index-linked annuities.
In the first nine months of 2024, total annuity sales grew by 23 percent, reaching $331.2 billion.
"Favorable economic conditions and growing need for guaranteed retirement income continue to propel strong annuity sales results this year,” Bryan Hodgens, senior vice president and head of Limra research said in a statement. He noted that despite potential interest rate cuts on the horizon, fixed annuity products are expected to continue driving overall sales higher in 2024.
Year-to-date, fixed-rate deferred sales went up 17 percent to reach $124.4 billion, which Hodgens attributed to still-turbulent financial markets and expectations of interest rate reductions.
“FRD sales remained strong in the third quarter, likely bolstered by elevated market volatility in July and August,” he noted, adding that while sales growth may moderate with further rate cuts, strong reinvestment trends should sustain the product’s performance.
Meanwhile, registered index-linked annuities hit another quarterly record with $17.3 billion in sales, a 37 percent increase over the previous year and contributing to their $48.2 billion sales run so far in 2024. Considering continued interest from consumers and a playing field of providers all too happy to oblige, Limra expects RILA sales to maintain their momentum to achieve another record year.
“Various carriers have introduced at least seven new RILA products into the market this year,” said Hodgens.
Fixed indexed annuities also saw record results, rising by a whopping 54 percent year over year to $34.9 billion – more than double what it was just three years ago.
“In the face of economic uncertainty, our research showed more consumer interest in financial solutions that offer downside protection and upside growth opportunity,” Hodgens said.
Income annuities also posted significant gains in the third quarter. Single premium immediate annuities rose 17 percent year over year to $3.4 billion. Year-to-date, SPIA sales grew by 7 percent, reaching $10.4 billion. Deferred income annuities surged even higher, up 40 percent in the third quarter to $1.3 billion, while DIA sales for the first nine months of 2024 grew by 33 percent to $3.8 billion.
Traditional variable annuities maintained their upward trajectory, with third-quarter sales increasing 14 percent to $14.9 billion. Year-to-date, traditional VA sales totaled $44 billion, a 12 percent rise compared to the same period in 2023.
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Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
