Soaring sales of fixed annuities in the third quarter

What do you want to know

  • LIMRA reported $80 billion in U.S. individual annuity sales during the quarter.
  • Fixed payout annuity sales were strong.
  • Sales of traditional variable annuities fell.

Annuities are like insurance sausage casings stuffed with obligations. Rising interest rates helped insurers improve fill in the third quarter.

Sales of all individual annuities in the United States increased 27% year-over-year to $80 billion, and sales of individual non-variable annuities soared 75% to 56 billion, according to new issuer survey data from LIMRA.

Todd Giesing, assistant vice president of the LIMRA Annuity Research unit, said in a comment, included in the announcement of the survey results, that insurers raised credit rates on fixed-rate annuities at one point. where consumers seek refuge from the investment market. volatility.

“Our forecasts suggest that protection products will continue to propel the growth of the annuity market over the next few years,” Giesing said.

What this means

Some life insurers have moved away from assuming annuity rate risk in recent years, and some continue to reduce their exposure to guaranteed rate risk, despite rising rates.

Other insurers seem content to use rising rates on their bond investments to add and improve rate guarantees.

For clients and their annuity advisors, the challenge will be to understand which issuers offer fixed rate guarantees and how these insurers manage their exposure to rate guarantee risk.

LIMRA

LIMRA is a Windsor, Connecticut-based organization that helps member firms collect and analyze financial services market data.

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