Annuities selling at record level as clients look for growth and buffers

investmentnews.com:

Annuity sales have rocketed to record levels this year, fueled by demand for products that give contract owners stock exposure but provide limits that keep them from getting burned too severely by market drops.

Those products, registered index-linked annuities, have gone from being a blip on independent broker-dealers’ radar to one of the hottest-selling products, according to a sales report Tuesday by Limra.

“In 2017, we had four carriers that were offering RILAs. And today we have 17 — and there are more coming,” said Todd Giesing, assistant vice president at Limra Annuity Research, adding that he expects as many as 21 carriers in the space by the end of the year.

The products are different from traditional variable annuities in that they include buffers against both losses and upside. While VAs are also often sold with guaranteed income components, some RILAs are adding those features as well, Giesing said.

Whether RILAs with guaranteed living benefits are additive to the market or will end up cannibalizing sales of VAs with similar insurance features is a big question, he noted.

So far this year, total annuity sales hit $182.9 billion, a 28% bump from the the first half of 2022, according to Limra.

There were $26.2 billion in sales of traditional VAs, down 25% from the figures in the first half of 2022. Meanwhile, sales of RILAs reached $22 billion, up by 8%.

Fixed annuities have also been selling at higher volumes, with total sales of $134.5 billion for the first half of the year, up 54% from the $87.3 billion seen during the same time last year. While more than half of this year’s sales went to fixed-rate deferred annuities (up 64%), fixed-indexed annuities raked in $48.5 billion (up 35%), according to Limra.

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