Annuity sales surged to a $432.4B high in 2024

Retail annuity sales broke another record in 2024, with $432.4 billion flowing into the space throughout the year, according to new figures from Limra.

The data from Limra's 2024 retail annuity sales survey, which covers 83 percent of the US annuity market, showed a 12 percent increase in annual sales from 2023 and the third consecutive year of record-setting sales. .

“Since the pandemic, we have seen a significant rise in consumer interest in investment protection and guaranteed retirement income solutions,” Bryan Hodgens, senior vice president and head of Limra research, said in a statement revealing the results.

The 2024 snapshot showed declining demand for fixed-rate deferred annuities in the fourth quarter after the Federal Reserve started cutting interest rates in September.

Based on preliminary fourth quarter reporting, FRD sales during the three-month period totaled $29.4 billion, down 50 percent compared to the same period in 2023. Annual FRD sales totaled $153.4 billion, a 7 percent drop from 2023.

“If interest rates continue to drop this year as expected, it will undoubtedly diminish demand for FRDs in 2025,” Hodgens said, adding that contracts coming out of surrender could still drive some reinvestment into these products.

"We are forecasting FRD sales to fall as much as 25% in 2025 but remain more than double the FRD sales prior to 2022,” he said.

Fixed indexed annuities set an annual sales record, growing 31 percent to a new high of $125.5 billion, which included $30.4 billion netted in the fourth quarter.

“Investor demand for protection-based solutions remains high and is driving the growth and competition in the FIA market,” Hodgens said.

While lower interest rates might take some of the shine off FIAs in 2025, he said Limra expects sales to stay above $100 billion for the year as innovative index design and competitive participation rates drive demand.

Registered index-linked annuities also saw strong momentum. A $17.3 billion fourth quarter rally helped annual sales rise 37 percent to $65.2 billion in 2024, marking the 11th consecutive year of growth. Limra expects RILA demand to remain robust in 2025 as features including buffers, floors and participation rates continue to appeal to consumers.

"Product designs will sustain momentum for RILA sales in 2025," Hodgens said. "Limra projects RILA sales will remain at or slightly above the sales in 2024.”

Traditional variable annuity sales increased for the first time in three years, Limra reported, as stock market gains and advisor demand buoyed VA sales up 19 percent to $61.2 billion.

“Double-digit growth in the equity market, product innovation and increased interest from registered investment advisors propelled sales,” Hodgens said.

Despite fourth-quarter resistance from declining interest rates, income annuities also ended 2024 at record highs. Single premium immediate annuity sales ticked up 2 percent to manage a new $13.6 billion record.

Deferred income annuity sales were relatively sluggish in the fourth quarter, 17 percent less than the same period in 2023. Still, they managed to close 2024 with $4.9 billion, marking a 17 percent year-on-year gain over the previous year.