This month, The Insured Retirement Institute (IRI) cited data reported by Beacon Research and Morningstar Inc. to announce that second-quarter 2014 sales of annuities had hit their highest levels in three years.
Overall annuity sales were driven as high as 59.9 billion in the second quarter, thanks to heightened consumer demand for guaranteed income and protection, especially in fixed annuities. According to the IRI, this number has risen by 9.9% since the same time last year.
A 6.8% rise in overall annuity sales was recorded in the first quarter alone. Fixed annuity sales increased 7.6% over the first quarter and 41.6% over the past year to draw in $24.3 billion in the second quarter.
Fixed index annuities were the top seller, hitting a quarterly record of $12.9 million in the second quarter for an increase of 14.8% over the year-ago period. They also accounted for 53% of the overall annuity sales increase in the second quarter.
According to a news release from Cathy Weatherford, President and CEO of IRI, “These are the highest industry-wide sales we’ve seen in three years and, on the fixed side of the market, the highest in five years.”
While most of the data released by the IRI was positive, variable annuity sales dropped by 4.6% from the year-ago period. However, the $35.6 billion they generated in sales was still a 6.2% increase from the first quarter, and variable annuity net assets brought in a record-breaking $1.93 trillion.
“Variable annuity sales continue to flow into living-benefit-based annuities,” John McCarthy, who works as product manager of annuity solutions at Morningstar Inc., told insurancenewsnet.com. “At the same time, interest is increasing for VA products that allow investors to diversify with alternatives in a tax beneficial way.”
Other industry analysts theorized that higher interest rates have resulted in higher sales for fixed annuities. As for fixed index annuities, it seems that buyers were drawn in by the promise of protection from market losses.