Something Unusual Happened to Q4 Annuity Sales: IRI

The Insured Retirement Institute thinks overall sales of annuities may have increased 0.3% between the fourth quarter of 2016 and the fourth quarter of 2017, to $48.4 billion.

IRI gets its data on variable annuity sales from Morningstar Inc., and its data on sales of non-variable annuities from Beacon Research.

Morningstar says variable annuity sales fell 2% in the fourth quarter, to $24.4 billion.

Beacon says non-variable annuity sales rose 2.7%, to $24.5 billion.

LIMRA reported in February, based on an insurer survey, that it believes fourth-quarter annuity sales were about 0.4% lower than they were in the fourth quarter of 2016.

(Related: Annuity Sales Stabilize: LIMRA)

Although LIMRA found that overall U.S. annuity sales fell in the fourth quarter, that result was the strongest LIMRA has reported since the first quarter of 2016.

Annuity sales had been falling sharply every quarter since the start of 2016, partly because of the effects of uncertainty about U.S. Department of Labor (DOL) fiduciary rule, and partly because of the effects of low interest rates and changes in accounting rules on insurers’ ability to absorb investment risk.

IRI President Cathy Weatherford said in a statement about IRI’s new report that she believes sales increased because insurers and distributors have started to adapt to the new regulatory environment.

” With the DOL fiduciary rule now vacated by the 5th Circuit Court of Appeals, we expect sales to continue building on these increases in 2018 as transaction friction abates,” Weatherford said.

For variable annuity issuers, a combination of sales problems and a strong stock market produced a paradox: Assets increased to about $2 trillion, from $1.9 trillion, even though consumers took more money out of variable annuity contracts than they put in.

IRI broke out separate results for four major types of non-variable annuities: market-value-adjusted annuities, income annuities, book value annuities and indexed annuities.

We’ve posted the results for the four major non-variable annuity product types above, in a “ gallery.” You can flip through the results by using the arrows on the sides of the gallery box.

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