The U.S total sale of annuities grew from 16% to $79.4 billion to the U.S LIMRA’s survey of Annuity Sales of individuals, which covers about 90% of the marketplace. Fixed-rate deferred annuities (FRDs) led the way, posting their highest quarterly performance: Sales totaled $28.7 billion, up 79% from the previous year. The assistant VP, Todd Giesing, of LIMRA Annuity Research in Windsor, Conn., said that all fixed products exhibited favorable growth. Investments That Are Less Risky Since They Don’t Experience Downward Price Volatility He ascribed the outstanding amounts to migration to security amid turbulent equities marketplaces, aided by interest rate hikes. He said that It is a situation of the rate that we have not seen in an extended phase, with average returns on repaired deferred annuities at or over 3%. The deferred annuities of fixed-rate are agreements that provide an annual fixed percent yield and income enlargement, generally at a more incredible growth speed due to a cashflow shortage; annuitants start receiving a total payout after the agreement rather than a flow of money over a specific period. According to Jason Branning, fixed annuity rates have moved quickly this year in response to 10-year Treasury rate rises. Carriers in Order According to Giesing, the providers with the best results in the quarter were “those with a diverse array of offering annuity products.” That makes perfect sense to some industry observers. “Because they provide the majority or all kinds of annuities and have an existence in all networks, bigger carriers offer additional annuity routes can capitalize on shifts in product attractiveness and information being communicated,” said Frank O’Connor, the research vice president. New York Life was the top seller of all forms of annuities in the third quarter, with $11.2 billion in sales of the annuity. AIG Cos. was the 2nd largest vendor, at $9.7 billion. Massachusetts Mutual Life ($8.3 billion), Jackson National Life ($8.2 billion), and Equitable Financial ($7.7 billion) were the following companies to go public. The leading distributor of variable annuities was Jackson National. Registered Index-linked Annuities (RILA)’s Daily Lives (RILAs), a Va type that compensates holders with a proportion of stock index gains while limiting loss was the second most successful kind of annuity in the quarter. Despite being connected to a stock index, RILAs provide downside protection and significant upside potential. That mix has helped them become very popular in recent years. The sales of RILAs were the greatest they’ve increasingly been in the second quarter, up almost 8% year on year to $10.8 billion. They currently account for 40% of the total sales of VA. “RILAs fill a need in the product marketplace,” said David Blanchett, the head of retirement research at Prudential’s investment management business, PGIM, in Lexington, Ky. RILAs “provide investors [and] advisers a lot more flexibility in terms of the sorts of risk they choose to accept.” “I honestly believe there is still a lot of possibility for development in the RILA arena.” On the other hand, the reversal of VA Traditional VAs fared poorly in the quarter. Their combined sales decreased 27% from last year to $16.5 billion, the lowest quarterly performance for the category since 1995. Other Fixed Items Other forms of fixed annuities performed well as well. Fixed-indexed annuities (FIAs), similar to RILAs in that the upside potential is less generous and the downside is fixed at zero, took in $19.7 billion in the third quarter, a roughly 28% increase year over year. These, once again, represent a flight to safety. FIAs are as secure as CDs or investment-grade bonds since they cannot lose money (though they pay better in an up market). Single premium instant annuities (SPIAs), the oldest kind of annuity contract, were sold for $2 billion in the third quarter, up 11% yearly. Changes in Sales Channels Surprisingly, annuity sales via national full-service broker-dealers increased by 55% in the quarter, while those through individual broker-dealers decreased by 12%. At the same time, bank sales increased by 48%. “Banks and full-service national broker-dealers are driving this record-breaking expansion,” said Giesing. “Independent broker-dealers have failed to capitalize on higher rates and expansion in FRDs.” According to Bamji of the Alliance for Lifetime Income, demand for annuities will undoubtedly continue to rise as more Americans retire.
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Helping people plan a secure financial future > REDUCE YOUR TAXES > CUT YOUR INVESTMENT COSTS > PLAN YOUR RETIREMENT > MEDICARE SOLUTIONS MADE EASYWE HELP OUR CLIENTS CONSERVATIVELY MANAGE THEIR INVESMENTS AND MAXIMIZE THEIR RETIREMENT INCOME.FRANK URBAN is a well-known financial speaker and educator in Charleston, South Carolina, and is President and Founder of The URBAN Advisory Group LLC, A Registered Investment Advisor, URBAN Healthcare Solutions For Seniors and is a Federal Employee Benefits Specialist. His expertise is helping retirees and those soon to retire avoid common, costly financial mistakes. For over 30 years Frank has been advising retirees and pre-retirees, including past & present employees of the U.S. Government, Veterans and their families, and many past and current owners and employees of local businesses as well as those from out of the area who choose to relocate to Charleston.He is/has been a member of the National Ethics Bureau, an organization that promotes consumer confidence by providing a source to verify business ethics for financial and insurance advisors. Frank has lectured widely on financial topics, hosted a Safe Money and Retirement Radio Show on WTMA 1250AM and speaks regularly to investors in greater Charleston and the surrounding areas. He attended Northeastern University and served in the United States Marine Corps. Frank has 4 children, 9 grandchildren and 9 great-grandchildren and lives West of the Ashley with his wife Donna. Office: (843)556-7400 Email: [email protected] Cell: (843)729-8667
