US annuity sales on track for another record-breaking quarter: Limra

Early results from Limra show no slowdown in annuity sales during the first quarter after a record-smashing 2022.

According to preliminary results from Limra’s U.S. Individual Annuity Sales Survey, total first-quarter annuity sales were $92.9 billion, a 47% increase over the same quarter last year, not to mention the highest quarterly sales ever recorded.

Todd Giesing, assistant vice president at Limra Annuity Research, said market conditions continue to drive investor demand for annuities, with every major fixed annuity product line experiencing at least double-digit year-over-year growth.

“Despite expectations that interest rates will level off, LIMRA is forecasting total annuity sales in 2023 to exceed $300 billion for the second consecutive year,” Giesing said in a statement.

The preliminary first-quarter 2023 estimates are based on monthly reporting that represents 83% of the total market.  

Breaking down the results, fixed-rate deferred annuity sales were $40.9 billion in the first quarter, 157% higher than the first quarter of 2022, according to the survey. Meanwhile, fixed-indexed annuity sales also saw a record-breaking quarter, posting sales of $23.1 billion, up 42% from first quarter 2022 results and 4% higher than the record set in the fourth quarter of 2022.

With investors seeking to lock in favorable payout rates before they begin to fall, the survey showed the income annuity market enjoying its highest quarterly sales ever, topping $4.1 billion. Single-premium immediate annuity sales were $3.3 billion in the first quarter, 120% higher than prior year, while deferred-income annuity sales jumped 125% year-over-year to $820 million in the first quarter, Limra said.  

For their part, registered index-linked annuity sales totaled $10.4 billion in the first quarter of 2023, up 8% from the prior year.

On the flip side, the preliminary report showed traditional variable annuity sales continuing to slide in response to market volatility. Traditional VA sales totaled $12.9 billion in the first quarter, down 30% from the first quarter of 2022.   

“Annuities are in as good a position for robust sales as they have been for years. Higher interest rates spur fixed annuity sales. Volatile equity markets are likely to propel interest in RILAs. And, between the insecurity of Social Security and Congress’s nod to annuitization in SECURE 2.0, income annuities should experience a bump,” said Steve Parrish, co-director for the The American College Center for Retirement Income.

“An added benefit is that the traditional investment advisory channels are taking a new look at annuities," Parrish said. "They’re going from treating annuities with derision to seeing them as a kind of alternative investment.”