Sales Swing Upward Across Annuity Industry During Second-Quarter 2013

Combined Variable and Fixed Annuity Sales Rise Nearly 10 Percent from Previous Quarter 

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final second-quarter 2013 sales results for the U.S. annuity industry, based on data reported by Morningstar, Inc. and Beacon Research. Industry-wide annuity sales for the second quarter rose 9.9 percent to nearly $54.5 billion from $49.6 billion in the previous quarter, but were down 1.4 percent from $55.3 billion in the second quarter of 2012. 

Fixed annuity sales rose to their highest quarterly level since the fourth quarter of 2011. Sales totaled $17.14 billion, up 14.6 percent from just under $15 billion in the first quarter and up 0.2 percent from $17.10 billion in the second quarter of 2012, according to Beacon Research. Meanwhile, variable annuity total sales topped $37.3 billion in the second quarter of 2013, according to Morningstar. This is a 7.8 percent increase from $34.6 billion in the first quarter, but a 2.2 percent drop from nearly $38.2 billion in the second quarter of 2012. 

“In previous quarters, demand for lifetime income was balancing headwinds from low interest rates,” said Cathy Weatherford, IRI President and CEO. “Now with rates rising, we are seeing sales swing upwards with fixed sales reaching their highest mark in six quarters and variable annuity sales at their highest level in a year. With VA total net assets reaching a new record high and VA net sales showing marked improvement, overall it was a solid quarter for the industry.”

According to Beacon Research, sales of all types of fixed annuities increased from first-quarter levels. Sales of market value adjusted annuities rose 34.9 percent, while indexed annuity sales were up by 17.1 percent and income annuity sales were up by 16.9 percent. For the fixed annuity market, there were $9.4 billion in qualified sales and $7.7 billion in non-qualified sales during the second quarter. 

“Rising interest rates, along with the steepest yield curve in nearly two years, helped drive second quarter’s fixed annuity sales growth,” Beacon Research President Jeremy Alexander said. “Strong demand and new product introductions boosted deferred income annuity sales nearly 40 percent from first quarter.” 

According to Morningstar, variable annuity total net assets increased by a fraction of a percent from the previous quarter. Though only a slight increase, the upward movement marked the fourth-consecutive quarterly increase in variable annuity total net assets, which stand at more than $1.7 trillion. This is a 10.1 percent increase from almost $1.6 trillion in the second quarter of 2012. Within the variable annuity market, there were $23.8 billion in qualified sales and $13.5 billion in non-qualified sales during the quarter.

“Net sales improved significantly in the second quarter despite continued large outflows from retirement plans and companies that have exited the industry over the past several quarters,” said Frank O’Connor, product manager, Morningstar Annuity Research Center.

**Complete sales data for second-quarter 2013 is available HERE.

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 individuals, financial advisors, and institutions. Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 10 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 registered investment advisor subsidiaries and has more than $166 billion in assets under advisement and management as of June 30, 2013. 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 Evanston, 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 a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry.  Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: our members are the major insurers, asset managers, broker dealers and more than 150,000 financial professionals. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella. IRI’s mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and advocate before public policymakers on critical issues affecting insured retirement strategies and the consumers that rely on their guarantees. Visit today to experience the vast resources of the Insured Retirement Institute for yourself.

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Andrew Simonelli

Sales Swing Upward Across Annuity Industry During Second-Quarter 2013