In the initial quarter of 2024, the United States witnessed a remarkable surge in annuity sales, totaling $113.5 billion. This figure represents a substantial 21% increase from the previous year’s results, approaching the record-high quarterly sales achieved in the final quarter of 2023. These findings stem from the latest insights provided by LIMRA’s U.S. Individual Annuity Sales Survey, which covers 84% of the entire U.S. annuity market. Notably, these sales figures represent the most robust first-quarter performance observed since LIMRA commenced tracking sales trends back in the 1980s.
Bryan Hodgens, head of LIMRA research, noted that the impressive sales momentum observed over the past two years persisted into 2024. He attributed this sustained growth to favorable economic conditions and an increasing inclination among investors to seek out guaranteed retirement income. Hodgens emphasized that every product line experienced double-digit sales expansion. Despite the anticipation of potential regulatory and economic challenges in the latter half of the year, LIMRA remains optimistic about the continued strong performance of annuity sales.
Fixed-Rate Deferred
In the first quarter of 2024, total fixed-rate deferred annuity (FRD) sales reached $48 billion, marking a significant 16% increase compared to the same period in 2023. FRD annuities retained their position as the primary driver of annuity sales growth, constituting over 42% of the total annuity market during the first quarter.
Hodgens pointed out, “Eighty-five percent of FRD sales are short duration products (five years or less). Higher interest rates combined with insurers’ ability to offer, on average, better crediting rates, have propelled product sales to another level.” He added, “To put these first-quarter results in perspective, from 2008 to 2021, the average annual FRD sales were just $42 billion, 14% lower than the first quarter of 2024.”
Fixed Indexed Annuities
The first quarter of 2024 saw record sales for fixed indexed annuities (FIA), with total sales reaching $29.3 billion, marking a remarkable 27% increase from the previous year.
Hodgens commented, “FIA products continue to offer very competitive crediting rates while protecting the principal investment, an attractive proposition for today’s investors.”
Income Annuities
Sales of income annuity products achieved a quarterly record, propelled by rising interest rates. Single premium immediate annuity (SPIA) sales amounted to $4 billion in the first quarter, representing a 19% increase from the previous year. Deferred income annuity (DIA) sales reached $1.1 billion in the first quarter, marking a notable 35% year-over-year increase.
Registered Index-Linked Annuities
For the fourth consecutive quarter, registered index-linked annuity (RILA) sales hit record highs. RILA sales surged by 40% in the first quarter, reaching $14.5 billion.
Hodgens expressed, “Product innovation and new market entrants suggest the RILA market still has significant growth potential. LIMRA is forecasting RILA sales to exceed $50 billion in 2024.”
Traditional Variable Annuities
Traditional variable annuity sales experienced improvement in the first quarter, rising by 13% year over year to $14.5 billion.
“Strong equity market performance over the past year has made traditional VAs more attractive,” noted Hodgens. “While these products will not command the market share they did 10 years ago, LIMRA predicts the continued equity market growth will propel traditional VA sales to grow as much as 10% in 2024 from current levels.”
The preliminary first-quarter 2024 annuity industry estimates are based on monthly reporting, with a summary of the results available in LIMRA’s Fact Tank. The top 20 rankings of total, variable, and fixed annuity writers for the first quarter of 2024 will be accessible in mid-May, following the last of the earnings calls for the participating carriers.
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