Stock market volatility, uncertainty about next year’s presidential election, and regional conflicts in Europe and the Middle East haven’t discouraged investors from purchasing annuities, according to insurance industry experts. Consultant and data provider, Wink, Inc., recently reported that annuity sales could be on track to break records in 2023.
Annuity Sales Rose Going Into Third Quarter
Sales of annuity products were higher through the first half of 2023, leading many industry experts to suggest that sales could grow beyond even their upbeat expectations.
By the end of June, total annuity sales were 27% higher than the first half of 2022.
That trend slowed slightly in the third quarter. Between June 30 and the end of September, sales of annuity products declined by an average of 1.4%.
However, compared to the third quarter of 2022, annuity sales rose an average of 7.5%.
Soft Third Quarter Annuity Sales Hid Strong Market
Limra, an insurance industry trade association, reported that year-over-year annuity sales rose across most categories by the end of the third quarter of 2023, totalling more than $89.4 billion.
“Despite the slight decline in the S&P in the third quarter, the market remains up,” said Todd Giesing, assistant vice president, Limra Annuity Research. He also noted that, “Limra is projecting 2023 sales to surpass … the record set in 2022.”
To put that into perspective, Limra noted that full-year 2022 annuity sales came in at just over $310 billion.
As an example of the annuity market’s underlying strength, deferred annuity sales in the third quarter came in at $78.6 billion. They were $72.4 billion in the same quarter in 2022.
Even though deferred annuity sales rose 8.5% over last year, they were down from Q2 by 1.4%.
There are similar trends in other annuity categories.
Annuity Sales By Category: Third Quarter vs. Second Quarter 2023
- Non-variable-Deferred: -2.3%
- Indexed Annuities: -7.2%
- Traditional Fixed Annuities: -1.4%
- Variable Annuities: -3.4%
Source: Wink, Inc.
While many categories of annuities had sales decline between the second and third quarters of 2023, a few showed continued sales growth.
For example, sales of Multi-Year Guaranteed Annuities rose by 1.6% between the end of June and the end of September. Variable-Deferred Annuity sales rose by 0.08%. And sales of Structured Annuities rose by 6.0% quarter-over-quarter.
Comparing Q3 2023 Annuity Sales to 2022’s Third Quarter
| Q3 2023 | Q3 2022 | |
| Indexed Annuities | $23.3 billion | $21 billion |
| Fixed Annuities | $495 million | $451 million |
| Variable Deferred Annuities | $23.8 billion | $23.6 billion |
| Non-Variable Deferred Annuities | $54.8 billion | $48.8 billion |
| Variable Annuities | $12.3 billion | $13.4 billion |
Variable Annuity Sales Bucked Both Trends in the Third Quarter
Variable annuity contract sales at the end of September 2023 were lower on both a quarter-by-quarter basis and a year-over-year comparison. They were down about 3.4% on the quarter and about 7.8% compared to the same period in 2022.
Annuity Sales on Pace for Record-Breaking Year
According to Limra, consumers seeking investment protection coupled with growth opportunity have driven sales of annuity products through the third quarter of 2023. The trade association says that this growth was led by a record demand for registered index-linked annuities.
Limra expects 2023 sales will surpass the record sales set in 2022, with sales projected to exceed $350 billion. That is over 10% higher than the record set in 2022.
Limra predicts income annuity sales will continue to grow steadily through 2026.