By Staff Reports
December 11, 2019
Annuity
sales fell in the third quarter of 2019, decreasing 8.4% as the combined sales
of fixed and variable annuities totaled $55.7 billion as compared to sales of
$60.8 billion in the second quarter of 2019, according to the Insured
Retirement Institute.
IRI
released final third-quarter 2019 market data for the U.S. annuity industry
based on data reported by Beacon Annuity Solutions and Morningstar, Inc.
Sales
were on par with year ago levels, down just 0.4% from total annuity sales of
$55.9 billion in the third quarter of 2018. Total annuity sales on a
year-to-date basis totaled $174.3 billion, up 7.5% versus third quarter 2018
year-to-date sales of $162.2 billion.
Fixed
Annuity Sales
• Fixed
annuity sales totaled $30.1 billion in the third quarter, a 16% decrease from
second quarter sales of $35.8 billion. FA sales were 5.5% lower than 2018
third-quarter sales of $31.8 billion.
•
Year-to-date fixed annuity sales of $101.8 billion represent a 14.1% increase
over sales of $89.2 billion in the year-to-date period ending September 30,
2019.
According
to Beacon Annuity Solutions, fixed annuity sales are off recent highs, but
fixed indexed and market-value adjusted annuities are higher than in the same
period last year.
• Fixed
indexed annuity sales totaled $18.2 billion in the third quarter, a 9% decrease
from second quarter sales of $20 billion. FIA sales were 5.5% lower than 2018
third-quarter sales of $31.8 billion.
• FIA
sales were nearly identical to the $18 billion in sales for the third quarter
2018.
Variable
Annuity Sales[i]
•
Third-quarter variable annuity sales totaled $25.6 billion, up 2.4% versus 2019
second-quarter sales of $25 billion, and 6.2% higher than 2018 third-quarter VA
sales of $24.1 billion.
• Year-to-date VA sales of $72.5 billion represent a 0.7% decrease over sales of $73 billion in the year-to-date period ending September 30, 2019.
• Year-to-date VA sales of $72.5 billion represent a 0.7% decrease over sales of $73 billion in the year-to-date period ending September 30, 2019.
“Demographics
continue to favor growth in the use of annuities for guaranteed lifetime income
and protection against market downturns,” said IRI President and CEO Wayne Chopus.
“We remain optimistic for growth in 2020 and beyond.”
Sales
Falling
Book
value annuity sales totaled $4.1 billion, a 43.3% decline versus $7.2 billion
in the second quarter of 2019. Third quarter sales were down 41% from 2018
third-quarter sales of $7 billion.
Market
value adjusted (MVA) annuity sales of $5 billion were down 3.8% from 2019
second-quarter sales of $5.2 billion, but up 22% versus third-quarter 2018
sales of $4.1 billion
Income
annuity sales of $2.7 billion were down 18.1% from second-quarter sales of $3.3
billion. Sales were flat versus third-quarter 2018 sales of $2.7 billion.
For the
entire fixed annuity market, there were approximately $17.4 billion in
qualified sales and $12.7 billion in non-qualified sales during the third
quarter of 2019.
“The
inverted yield curve, along with declining corporate bond yields, continued to
apply downward pressure on overall third-quarter fixed annuity sales. In
addition, fixed indexed annuities suffered from higher hedging costs due to
market volatility,” said Beacon Annuity Solutions CEO Jeremy Alexander. “We
anticipate next quarter sales to be flat with an upward bias given the
steepening yield curve, as well as rising corporate bond rates and lower market
volatility.”
According
to Morningstar, variable annuity net assets fell in the third quarter on lower
investment returns and negative net asset flows. At $1.95 trillion, VA assets
fell 0.5% from $1.96 trillion in the second quarter of 2019.
Allocation
funds held $796.8 billion in VA assets, or 40.9% of the total, falling below
the $800 million mark. Equity funds held $597 billion, or 30.7% of total VA
assets, while fixed accounts held $351.2 billion, or 18% of VA assets.
Net
asset flows in variable annuities were -$21.4 billion in the third quarter, up
from -$20.4 in the second quarter but an improvement over outflows of $24.8
billion in the first quarter. Within the VA market, there were $16.7 billion in
qualified sales and $8.9 billion in non-qualified sales during the third
quarter of 2019.
“Structured
annuities continued to gain market share in the VA space,” said Michael
Manetta, senior quantitative analyst at Morningstar. “With more than a decade
having passed since a significant stock market correction, this growth likely
reflects investor interest in products that offer some form of downside
protection to the account value.”
No comments:
Post a Comment