Lewis & Ellis Inc.

Annuity sales tumble in first quarter

Life Insurance and Annuities
by Leon Langlitz
Annuity sales took a tumble in first quarter
Annuity sales took a tumble in first quarter

Even as the economy continues to improve, it may be slightly more difficult for companies which issue annuities to make their products attractive to workers of all ages.

The total value of annuity sales in the first three months of 2013 slipped 6 percent from the same period in 2012, to a total of $51.7 billion, according to LIMRA's latest U.S. Individual Annuities Sales survey. The biggest reason for this decline was that fixed annuity sales fell 11 percent on an annual basis, to just $16.2 billion. This marked the eighth consecutive quarter in which these values dropped.

Variable annuities fared only slightly better with a 4 percent decline, as sales fell to just $35.5 billion in the first quarter, the report said. Similarly, this was the sixth straight quarter during which sales dropped on an annual basis. Election of guaranteed living benefits within VA held steady at 84 percent from January to March.

Indexed annuity sales fell 4 percent to $7.8 billion, according to LIMRA. That was the lowest level observed in the last two years after these vehicles set record highs in both 2011 and 2012. However, one type of these products that increased appreciably was deferred income annuities, which spiked 147 percent on a year-over-year basis to $395 million. Since that time, four companies have entered the market.

As a result of all these changes, Joseph Montminy, who serves as assistant vice president and director of LIMRA's annuities research, notes that the environment now may actually be more difficult for many annuity writers than it was during the financial crisis.

This, in turn, should lead companies involved in the annuities market to carefully consider new ways to market these products to consumers as a means of boosting sales going forward. By offering a wider variety of products, these companies may be able to better connect with consumers who are now being choosier about their retirement investments.



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