The Secure Retirement Institute has published its results from the first quarter U.S. annuity sales survey. They found that total annuity revenues increased by 4% to $63.6 Billion.
Todd Giesing (assistant vice president, SRI research) points out that the first quarter of annuity sales is generally slower than the later quarters. He explains that this trend held in 2022 as annuity sales in January, February and March were slow. This was after a record year for annuity sale in 2021. It saw $254 billion in total sales, a 16% increase over 2020. It was the highest annuity sales year since 2008, and the third-highest sales ever recorded in history.
Giesing notes that March annuity sales climbed to new records. This quarter saw a shift in product mix, with fixed annuity offerings driving the overall growth.
According to SRI data, total fixed-annuity sales reached $35.2 million, an increase of 14% compared to the first quarter 2021. Fixed-indexed annuities saw double-digit growth, while fixed-rate deferred and fixed-indexed annuities saw double-digit sales growth. This brought the total fixed annuity sales back to pre-pandemic levels.
Fixed-indexed annuity sales totaled $16.3 billion, which is 21% more than the year before. Fixed-rate deferred annuity revenues increased 10% in the first three months of the year to $16 billion.
Giesing stated that both fixed-rate deferred products and FIAs benefited from the substantial interest rate increases in Q1. Investors sought protection and steady growth in the face of a nearly 5% equity market drop. These products offered that.
SRIs data shows that traditional variable annuity sales fell 8% year-overyear to $19.1 billion in Q1. Sales of registered index-linked annuities were $9.3 Billion. This figure is 2% more than the first quarter 2021, according to SRIs data. However, it also shows a 10% decrease from the previous quarter.
Giesing claims that FIAs are more attractive than RILAs because of the market conditions in quarter one. As a result, the extraordinary growth that RILAs have experienced over the last three years has slowed.
Experts agree that both fixed annuities and variable annuities are viable options for workplace retirement planning. However, this depends on the plans objectives. Fixed annuities can provide more predictability for growth and future income as well as lower fees. They may not offer as much upside potential as a fixed annuity, but that could be a significant consideration.
According to the most recent SRI data, immediate income and annuity sales were $1.5 Billion in the first quarter. This is the same as the first quarter 2021. Deferred income annuitys sales decreased 18% to $300 M.
Giesing claims that we are now seeing income annuities’ payout rates increase as interest rates rise. We expect investors to delay locking in rates as the Fed has indicated additional rate hikes later in the year. Therefore, sales will likely remain muted for the second and third quarters.
