Annuity sales achieved unprecedented levels in 2024, with most product categories reaching new peaks, according to Limra's latest report.
The trade group announced that total annuity sales reached $432.4 billion last year, marking a 12% increase from 2023 and representing the third consecutive record-breaking year. This surge underscores a growing client preference for guaranteed returns amid early-decade market volatility.
"Post-pandemic, there's been a notable uptick in clients seeking investment protection and assured retirement income solutions," observed Bryan Hodgens, Limra's senior vice president and head of research.
Client preferences for various annuity products have shifted in tandem with the evolving interest-rate landscape, Hodgens noted.
In 2023, fixed-rate deferred annuities were the primary sales drivers. However, as the Federal Reserve initiated rate cuts last year, attention shifted towards registered index-linked annuities (RILAs) and fixed-indexed annuities. "We anticipate this trend to persist into 2025," Hodgens added.
RILAs achieved an 11th consecutive annual sales record, reaching $65.2 billion in 2024—a 37% increase from the previous year.
"There's substantial potential in the RILA market as clients aim to benefit from robust equity market gains while mitigating downside risks," Hodgens stated. Limra forecasts that RILA sales will either maintain their 2024 levels or experience a slight uptick in the coming year.
Fixed-indexed annuities also saw impressive growth, with sales surpassing $125 billion in 2024—a 31% rise from 2023, setting a new record for the category.
Conversely, fixed-rate deferred annuities felt the impact of the changing interest-rate environment, with sales declining by 7% to $153.4 billion last year. Limra projects a potential 25% decrease in sales for these annuities in 2025.
"Should interest rates continue their expected decline this year, demand for fixed-rate deferred annuities will likely diminish in 2025," Hodgens commented.
Traditional variable annuities rebounded in 2024, recording sales of $61.2 billion—a 19% increase from 2023 and the first year-over-year growth in three years.
Factors contributing to this resurgence include rising equity markets, innovative product features, and heightened interest from registered investment advisors. "Provided market conditions remain stable, Limra anticipates variable annuity sales to stay above $60 billion in 2025," Hodgens concluded.
