Record sales in fixed annuities yielded the highest quarterly revenue for issuers in almost a decade
h 2017 results, according to LIMRA Secure Retirement Institute’s Fourth Quarter 2018 U.S. Retail Annuity Sales Survey.
Further, total annuity sales for the fourth quarter were $62.1 billion, a 22% increase compared to the same quarter of 2017.
Fourth quarter 2018 represents the highest quarterly total annuity sales since the first quarter of 2009, and the first time annuity sales have exceeded $60 billion since the fourth quarter of 2015.
Todd Giesing, LIMRA’s director of annuity research, says: “It's not uncommon that, when we see volatility spike, we see fixed [annuities] spike as well.”
Fixed annuity sales for the year of $132 billion and fixed-index sales of $69.6 billion set records, with FIAs beating their last annual revenue peak by $10 billion.
Structured or buffered products designed to combine upside with downside protection amounted to some $11 billion and more than 10% of variable sales in 2018, LIMRA says.
With issuers flocking to offer the hybrid products amidst the slump in sales connected to the partial implementation of the fiduciary rule, CUNA Mutual Group reached $1 billion in annuity sales in 2018 while tripling its sales force, according to Martin Powell, the firm’s head of annuity distribution.
“We had our best year ever,” Powell said, expressing a goal of hitting $1.3 billion for 2019 and eventually “ramping things up” to $2.5 billion or more.
“We’re going to be very strategic in working with advisors who believe in guaranteed income and who believe in annuities.”
The bank and credit union-focused issuer’s structured Zone and Horizon products carry around 150 to 175 basis points in expenses while allowing clients to choose from an array of floors in potential losses and ceiling levels in gains.
Over than 40 BDs offer products through selling agreements. Commission-free FIAs and VAs have been growing in popularity.
According to Giesing, LIMRA calls them “registered index-linked” products, which have been around since about 2010.
“It's not that they’re new per se, but at the same time they haven't had a lot of exposure because only a few carriers offered them,” he says, noting banks and independent broker-dealers as key distributors. “They definitely do have their place in the market.”
