2022 saw a rent explosion: Limra

2022 could be the year of rent. According to Limra’s preliminary results, total annuity sales rose to $310.6 billion in 2022, up 22% from 2021 and up 17% from the record set in 2008.

A hot fourth quarter helped the annual total. Total annuity sales in the fourth quarter were $87.2 billion, up 39% from the fourth quarter of 2021. According to Limra, this is the third consecutive quarter in which annuity sales have set a new record.

According to Limra, Q4 2022 annuity industry preliminary estimates are based on monthly reporting, which accounts for 83% of the total market.

“Investors seeking guaranteed growth and loss protection achieved extraordinary fixed annuity sales of $208 billion, up 49% from the record set in 2019,” said Todd Giesing, assistant vice president of Limra Annuity Research.

“The swing in interest rates in the fourth quarter prompted investors to lock in lending and repayment rates while they were high,” Giesing added. “Our forecast suggests that protection products will continue to drive growth in the annuity market over the next few years.”

“The prospect of running out of money in retirement has always been a fear for older Americans, and that fear has been exacerbated by recent market volatility hurting investment performance and inflation causing living costs to skyrocket,” said David Scranton, Founder and CEO director of the Sound Income Group. . “Annuities, such as fixed-rate annuities, can provide a stable income for retirees, so it’s not surprising that their popularity has grown in recent years. I don’t expect this to change as investors are now more familiar with this type of asset.”

Breaking down results by product type, Q4 fixed rate deferred annuity sales were $37.5 billion, up 241% from Q4 2021 sales. According to Limra, this is the best sales quarter for fixed-rate deferred annuities ever recorded. For all of 2022, fixed-rate deferred annuities totaled $112.1 billion, more than double (111%) sales in 2021 and 38% above the previous annual high of $80.8 billion set in 2002.

Sales of fixed indexed annuities also set records for both the quarter and the year. FIA Q4 sales were $21.9 billion, up 32% from Q4 2021. For the full year, FIA sales were $79.4 billion, up 25% from 2021 and 8% higher than the record set in 2019.

On the other hand, recorded Q4 indexed annuity sales were $9.9 billion, down 4% from Q4 2021. Time is high for product sales, Limra said.

Sales of traditional variable annuities continued to decline. In the fourth quarter, traditional VA sales fell 42% to $12.6 billion. In 2022, traditional VA sales were $61.7 billion, Limra said, down 29% from 2021.

Finally, the increase in rates stimulated the growth of annuity income. Limra said sales of one-time annuities with a one-time premium were $3.1 billion in the fourth quarter, up 94% year-over-year. In 2022, SPIA generated $9.1 billion in sales, up 44% from 2021 results. Meanwhile, fourth-quarter deferred income annuity sales rose 59% to $720 million. DIA’s sales for the year were $2.1 billion, up 24%.

“These results are not surprising,” said Michael Nakanishi, financial advisor to Kingswood US.

“At the end of the day, annuities are insurance products, and insurance products transfer risk from consumers to insurance companies for a fee or premium—whether it be the risk of property loss, life, accident, or, in this case, market volatility and/or loss. asset base/future income,” Nakanishi said. “It’s not good or bad, it’s just human nature.”

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