Look for Record-Breaking Annuity Sales in Q1: LIMRA

What You Need to Know

Last year’s market volatility prompted consumers to pay a record $312.8 billion for fixed annuities, according to LIMRA.
The fourth quarter also marked the first time since 2004 that bank sales led total annuity sales, increasing by 117% to $21.8 billion.
Nearly every type of annuity saw sales growth, except variable annuity sales, which fell by 41% in Q4.

Last year’s unprecedented long-term market volatility prompted consumers to pay a record-high $312.8 billion for the protection offered by fixed annuities, LIMRA reported Thursday. Total U.S. annuity sales in 2022 increased by 23% year over year and were 18% higher than the previous record of $265 billion set in 2008.

“The interest rate dip in December spurred investor demand looking to lock in the favorable rates before they dropped further,” Todd Giesing, assistant vice president of LIMRA Annuity Research, said in a statement. “As a result, total fourth quarter annuity sales marked a new record of $89.4 billion, a 42% increase from the fourth quarter of 2021.”

Giesing noted that LIMRA data showed an 80% year-over-year increase in pending total annuity contracts in January. “LIMRA expects the sales momentum experienced in 2022 to continue and is forecasting a record-breaking first quarter 2023.”

The fourth quarter also marked the first time since 2004 that bank sales led total annuity sales, increasing by 117% to $21.8 billion. In 2022, bank sales hit a record $73.7 billion, 69% higher than the year before.

“Banks, which traditionally attract more conservative investors, drove the growth that resulted in record-high fixed-rate deferred sales,” Giesing said. “Throughout 2022, short-term FRD crediting rates outpaced comparable CD rates, making them appealing to investors seeking guaranteed growth and protection.”

Fixed-Rate Deferred Sales Take Off

Fixed-rate deferred annuity sales in the fourth quarter came in at $38.4 billion, 249% higher than the same period in 2021. For the year, these annuities totaled $113 billion, more than double the sales in 2021.

Fixed-rate deferred sales represented 36% of the total individual U.S. annuity market. The record demand in December spilled into the new year, with LIMRA research showing a 315% year-over-year increase in pending fixed-rate deferred contracts in January, according to the report. LIMRA is forecasting record sales in the first quarter of this year.