IRI Issues Third-Quarter 2016 Annuity Sales Report

Year-To-Date Fixed Annuity Sales Remain Ahead of 2015, Variable Annuity Net Assets Increased for Fourth Consecutive Quarter

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final third-quarter 2016 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Industry-wide annuity sales in the third quarter of 2016 totaled $51.3 billion, an 8.2 percent decline from sales of $55.9 billion during the second quarter of 2016, and a 12.3 percent decline from $58.5 billion in the third quarter of 2015. 

According to Beacon Research, fixed annuity sales during the third quarter of 2016 reached $26 billion, an 11.9 percent decline from sales of $29.5 billion during the second quarter of 2016 and a slight 1.9 percent decline from sales of $26.5 billion during the third quarter of 2015. Variable annuity total sales were $25.4 billion in the third quarter of 2016, according to Morningstar. This was a 4 percent decline from sales of $26.4 billion in the prior quarter and a 20.8 percent decline from $32 billion in the third quarter of 2015. 

“The results during the third quarter are not surprising given the significant transition that has been occurring across the retirement planning market,” IRI President and CEO Cathy Weatherford said. “However, the recent rise in interest rates may be a positive development for the industry as we move into 2017. The 10-year Treasury is now up nearly 100 basis points from summer lows. Provided rates can continue to rise gradually, we may see fixed annuities offer higher crediting rates and more generous payouts on both fixed and variable products offering lifetime income. This, combined with ongoing favorable demographics, should lead to strong demand for lifetime income strategies in the years ahead.”

According to Beacon Research, though fixed annuity sales were down for the quarter, year-to-date fixed annuity sales are up 21.8 percent compared to 2015. Sales of all fixed annuity product categories also are up year-to-date. Fixed indexed annuity sales remained strong during the third quarter of 2016, reaching $15 billion. While this represents a 6.8 percent decline from near-record sales of $16.1 billion in the previous quarter, it is a 4.2 percent increase from $14.4 billion during the third quarter of 2015. As a percentage of sales, fixed indexed annuities now make up 57.6 percent of the fixed annuity market. For the entire fixed annuity market, there were approximately $15 billion in qualified sales and $11 billion in non-qualified sales during the third quarter of 2016.

“On a year-to-date basis, the fixed annuity market sold a record-breaking $85.5 billion in the first three quarters of 2016,” Beacon Research CEO Jeremy Alexander said. “Indexed annuities continue to lead the increase with $46.2 billion of year-to-date sales, a 20 percent increase from $38.5 billion during the same period of 2015. In addition, the fixed income market, which includes immediate annuities and DIAs, experienced record-breaking, year-to-date sales of $9.9 billion, a 12 percent increase from 2015. With annuity crediting rates and caps rising, the conditions continue to improve for the fixed annuity market. If sales only remain flat in Q4, 2016 will shatter the annual fixed annuity sales record of $106.7 billion set in 2008.”

[Click here to access complete fixed annuity sales data in the PDF version of this release.] 

According to Morningstar, variable annuity net assets increased 2.2 percent to $1.92 trillion during the third quarter of 2016. Variable annuity net assets have now risen for four consecutive quarters, increasing 4.3 percent during that period. Within the variable annuity market, there were $17.3 billion in qualified sales and $8.1 billion in non-qualified sales during the third quarter of 2016. 

“Assets continue to increase even though we see another quarter with declining sales, a recent trend we have seen with both data points,” said Kevin Loffredi, Senior Product Manager at Morningstar. “As we would expect, net flows continue to point more negative than we have ever seen, down $25 billion year to date. This trend is likely a new norm, due to the large mass of existing annuity business that is simply being withdrawn or paid out and less likely to be replaced with another annuity.”

[Click here to access complete variable annuity sales data in the PDF version of this release.]  

About Morningstar, Inc.: Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $185 billion in assets under advisement and management as of June 30, 2016. The company has operations in 27 countries. 

About Beacon Research:
 Beacon Research is an independent research company and application service provider founded in 1997 and based in Northfield, Ill. Beacon tracks fixed and variable annuity features, rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed annuity sales at the product level, and the first to make a decade’s worth of sales information available to subscribers online at Beacon lowers compliance risk and increases fixed annuity sales with 100% carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep websites of banks, TPMs, broker-dealers and marketing organizations. Carriers and financial institutions use its systems at for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms. Directly and through licensees, Beacon information can be accessed by hundreds of financial institutions and thousands of advisors.

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of 40 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at