25 January 2022

Annuity Sales Keep Up Hot Hand

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Annuities continue their hot hand overall, mostly growing over last year in sales as well as from the first to second quarter of 2021, according to the Insured Retirement Institute, an association for the retirement income industry.

Using data from Beacon Annuity Solutions and Morningstar, the IRI reported that overall annuities sales through the second quarter of 2021 rose 17.3% over the same period in 2020, and were up 6% over the first quarter of 2021, but up 27.9% over Q2 2020.

The difference in performance was in the type of annuities that did well. Total fixed annuity sales rose 12.1% to $30.8 billion in the second quarter or 2021, compared with $27.5 billion in the first quarter of 2021, and were up 16.2% over Q2 2020. Through the first two quarters, all fixed annuities were up 7.8% over the same period last year.

And though variable annuities were up 28.5% through the second quarter vs. 2020, sales between first and second quarters of  2021 were 0.2%, almost flat. That said, they were up 43.1% over second-quarter sales in 2020.

Within variable annuities, the big story was registered index-linked annuities (RILAs), which are structured variable products that use index options to provide both upside potential and downside protection.

They rose 11.2% in sales to $10.2 billion vs. the first quarter of 2021. Through the first two quarters, RILA sales were up 107.8% vs. the same period last year, while non-RILA variable annuities rose about 8% during that period.

Book vs. Market Value 

While the book value of fixed annuities dropped 3.4% through the first two quarters of 2021 versus the same period in 2020 ($12.3 billion vs. $12.7 billion), they grew almost 32% between Q1 and Q2 2021 (although down 7.8% versus the same period in 2020).

Fixed market value was up 52.7% through the first two quarters of 2021 versus the same period last year, although it dropped 9.7% between the first and second quarter of 2021.

Also, in the fixed market, $15.6 billion of sales were in qualified plans, while $15.2 billion were in non-qualified plans. For variable annuities, $17.9 billion were in qualified sales, but $11.3 billion were in non-qualified plans.

Variable annuity net assets in the second quarter also were down 1.2% to $2.08 billion vs. Q1 2021, according to Morningstar, which also reported that equity fund AUM was up 2.4% from quarter Q1 to Q2 in 2021, while fixed account funds were down 2.7%. Money market funds were down 9.2% between quarters and down 19.7% vs. Q2 2020.

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