LIMRA Report: Demand Soars For Fixed & Indexed Annuities In First Quarter 2023

The fixed and indexed annuity market has witnessed remarkable growth in the first quarter of 2023, with sales reaching unprecedented levels for the fourth consecutive quarter. According to the First Quarter 2023 Individual Annuity Sales Survey conducted by LIMRA, fixed and indexed annuity sales have experienced substantial increases, driven by favorable market conditions and investor demand. Let’s delve deeper into the factors contributing to this impressive growth and the trends observed in the fixed and indexed annuity market.

Favorable Market Conditions Propel Fixed & Indexed Annuity Insurance Product Surge:

1. Total fixed annuity sales increased by 101% to $70.9 billion in the first quarter of 2023 compared to the previous year, driving record sales for the fourth consecutive quarter.
2. All major fixed annuity product lines experienced double-digit growth during this period.
3. Factors contributing to the growth of the fixed annuity market include continued equity market volatility, favorable interest rates, investor concerns about the banking sector and a potential recession, making fixed annuities an attractive choice for asset protection, protected growth, and guaranteed retirement income.
4. Overall annuity sales reached $94.1 billion in the first quarter, representing a 49% increase compared to the previous year.
5. Fixed-rate deferred (FRD) annuity sales accounted for 44% of all annuity sales and saw a significant increase of 161% to $41.5 billion. Sales in almost all distribution channels, including independent broker-dealers and independent agents, experienced substantial year-over-year growth.
6. Fixed-indexed annuity (FIA) sales increased by 42% to $23.1 billion, setting a record for the third consecutive quarter. LIMRA forecasts a further 10% growth in FIA sales in 2023.

Record-Breaking Growth For Annuity Sales:

In the first quarter of 2023, total fixed annuity sales skyrocketed by an impressive 101% to reach $70.9 billion, compared to the previous year. This surge in sales was not limited to a single product line, as every major fixed annuity category experienced double-digit growth during this period.

Fixed-Rate Deferred Annuities (FRD): Fixed-rate deferred annuities continue to gain popularity among investors, as they accounted for a significant portion of all annuity sales. In the first quarter of 2023, FRD annuity sales reached a remarkable $41.5 billion, representing a staggering increase of 161%. Notably, independent broker-dealers and independent agents experienced substantial growth in FRD annuity sales, with increases of 647% and 715% respectively. The appeal of FRD annuities lies in their ability to offer stable returns in an economic climate with limited options for safe, short-term investments.

Fixed-Indexed Annuities (FIA): The growth of fixed-indexed annuities has been equally impressive. In the first quarter of 2023, FIA sales reached $23.1 billion, setting a record for the third consecutive quarter. This represents a substantial increase of 42%. The demand for FIAs stems from investors seeking solutions that provide a balance of protection and growth. LIMRA projects a further 10% growth in FIA sales for 2023. It is worth noting that a significant portion of this growth is expected to be in products without a guaranteed living benefit.

The fixed and indexed annuity market has experienced extraordinary growth in the first quarter of 2023, setting new records for the fourth consecutive quarter. The appeal of fixed-rate deferred annuities lies in their ability to provide stable returns in an uncertain economic climate. Similarly, fixed-indexed annuities offer the opportunity for both protection and growth. The sustained growth and record-breaking sales in the fixed and indexed annuity market reflect the increasing demand for secure and reliable financial solutions for retirement planning in the United States.