Unprecedented Growth: U.S. Annuities Set Sales Records in 2023

In a striking demonstration of financial resilience and investor confidence, the United States annuity market witnessed unprecedented growth in 2023, marking a historic sales record for the second year running.

Data from a comprehensive survey conducted by LIMRA, which accounts for 83% of the market, illuminates this trend.

The surge in sales, reaching a total of $385 billion—a 23% increase from 2022’s figures—was significantly fueled by the exceptional performance of fixed annuity products. These products alone amassed $286.2 billion in sales, registering a 36% rise from the previous year’s record. Bryan Hodgens, the lead researcher at LIMRA, emphasized the notable impact of economic factors and a heightened appetite for investments with guaranteed growth as pivotal drivers behind this surge.

In detail, the fourth quarter of 2023 alone saw annuity sales hitting $115.3 billion, showcasing a 29% quarterly increase from 2022 and surpassing the previous record from the first quarter of 2023 by 23%.

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Segment-Specific Highlights:

Fixed-Rate Deferred Annuities: This category had its best quarter ever in the last three months of 2023, with sales reaching $58.5 billion, a 52% jump from the same period in 2022. The annual figure for 2023 was $164.9 billion, up 46% from 2022.
Fixed Indexed Annuities (FIA): FIAs also experienced a banner year with sales totaling $95.6 billion, a 20% increase from the previous year. The fourth quarter saw a 10% increase in FIA sales to $24.6 billion compared to the same quarter in 2022.

Hodgens noted the competitive crediting rates offered by insurers as a key factor making FIAs appealing, especially amidst volatile equity markets. However, with an anticipation of falling interest rates in 2024, a slight dip in FIA sales is expected, though sales are projected to remain strong.

Income Annuities: The year was also remarkable for income annuity products, thanks to rising interest rates. Single premium immediate annuities (SPIA) and deferred income annuities (DIA) both set new sales records in 2023, with SPIAs reaching $13.2 billion (up 43%) and DIAs nearly doubling to $4.1 billion.
Registered Index-Linked Annuities (RILA): RILAs outperformed traditional variable annuities for the first time, with fourth-quarter sales of $13 billion (up 29%) and total 2023 sales of $47.4 billion (up 15%).
Traditional Variable Annuities: Contrasting the broader market growth, sales of traditional variable annuities dipped to their lowest, with a 17% decline to $51.4 billion in 2023.

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LIMRA’s projections remain optimistic, forecasting a potential growth in traditional VA sales by up to 10% in 2024, buoyed by continued equity market growth.

The final quarter figures of 2023 are preliminary estimates, with a comprehensive summary available in LIMRA’s Fact Tank. The top 20 annuity writers for 2023 will be announced in early March.

About LIMRA: Since its establishment in 1916, LIMRA has been a cornerstone for industry insights, providing over 700 member organizations with the knowledge and tools to confidently navigate change.

For more information, visit LIMRA’s website at www.limra.com.