Displaying items by tag: annuities

US annuity sales reached $113.5 billion in Q1, 21% higher than last year. It was also the second-highest quarterly figure on record after the fourth quarter of 2023, according to LIMRA. There was solid and impressive growth across nearly every category, and the organization anticipates that sales will remain strong for the rest of the year. 

Bryan Hodgens, the head of LIMRA research, noted, “The remarkable sales trends over the past two years continued into 2024. Favorable economic conditions and rising investor interest in securing guaranteed retirement income have resulted in double-digit sales growth in every product line.” 

Fixed-rate deferred annuities accounted for the biggest share of sales at 42%. This segment generated $48 billion in revenue, a 16% increase from last year. 85% of fixed-rate deferred annuities had durations of less than 5 years. 

Fixed-indexed annuities set a new record in terms of quarterly sales at $29.3 billion, 27% higher than last year. The next highest contributor were income annuities. Among this category, single-premium immediate annuity sales were $4 billion, a 19% increase from last year, and deferred-income annuities were at $1.1 billion, 35% higher than last year. Registered index-linked annuities saw $14.5 billion in sales and continue to be the fastest-growing segment with a 40% growth rate.

Finsum: Annuity sales maintained their hot streak with a new record for Q1 sales and the second-highest quarterly figure. LIMRA attributes this to high interest rates and unease about the economic situation. 

Annuity vendors experienced robust performance in Q1, with traditional variable annuity sales rising by 13% year-over-year to $14.5 billion, benefiting from strong equity market performance. Overall annuities amassing $113.5 billion in sales, marking a 21% surge compared to Q1 2023. Although falling slightly short of the Q4 2023 pinnacle, preliminary findings from LIMRA's U.S. Individual Annuity Sales Survey reveal this quarter's sales accounted for 84% of the total U.S. annuity market, the highest first-quarter performance since the 1980s. 

Bryan Hodgens, head of LIMRA research, attributed this trend to favorable economic conditions and heightened investor interest in securing retirement income guarantees, foreseeing continued resilience in annuity sales despite potential regulatory and economic challenges ahead. Variable annuities are expected to tack on another 10% through the end of the year.

Fixed-rate deferred annuities reached $48 billion, a 16% increase from Q1 2023, driving over 42% of the total annuity market. Fixed indexed annuity sales hit a record high of $29.3 billion, up by 27% year-over-year. Income annuity sales soared to a quarterly high, with SPIA sales reaching $4 billion and DIA sales reaching $1.1 billion, up by 19% and 35% respectively.

Finsum: Bond rates could be coming down as the Fed starts to ease rates and other retirement vehicles will become more attractive.

One of the most important decisions that retirees will make is their Social Security claiming date. It’s only made once, and it will have long-term repercussions. Therefore, it’s crucial to make the best decision. 

There are single-premium, non-variable fixed or indexed annuities that are designed to offer retirees income at one level during the first benefit period and then at a different level during the second benefit period. 

This can help retirees push back their claiming date so that they can receive a higher level of benefits. The initially higher level of income can last up to 8 years. The median premium is $100,000, with an average of $155,000. 

These offerings have been popular with middle-income clients and even some wealthier clients, especially among workers in government jobs who can retire at earlier ages. Additionally, these products are also amenable to investors with less tolerance for risk who value steady income over asset appreciation. One obstacle to greater adoption of these types of annuities is that it’s challenging for advisors and agents to explain the benefits of pushing back the Social Security claiming date. 

Finsum: Annuities can help retirees by pushing back their Social Security claiming date. One annuity product is increasingly popular as it comes with a higher level of income in the upfront years to help bridge the gap.

Lincoln Financial Group unveils the 1 Year S&P 500 Dual Trigger account, a pioneering addition to fixed-indexed annuities, offering market adaptability and full downside protection. This innovative option addresses consumer concerns about inflation, investment losses, and market volatility, catering to the 61% of consumers seeking growth and protection in their investments. 

Senior vice president of Annuity Product Management, Daniel Herr, anticipates robust sales approaching $100 billion by 2025, with the introduction of the 1 Year S&P 500 10% Daily Risk Control Trigger expanding growth opportunities.

As millions of Americans transition into retirement annually, Lincoln Financial remains committed to safeguarding their financial futures through diverse investment strategies. Senior vice president of Retirement Solutions Distribution, Tim Seifert, emphasizes the importance of new crediting strategies in empowering retirement planning. 

Finsum: Index annuity offerings offer a great alternative to fixed income for those in or nearing retirement. 

The ETF market continues to grow and mature by providing new funds for investors to reach their financial goals. BMO Global Asset Management sees more growth in the coming year, driven by more targeted funds that appeal to more sophisticated investors.

It sees the ETF market continuing to evolve and innovate in order to meet the growing demand for more sophisticated products in an ETF wrapper. It sees ETFs becoming the primary way for investors to get exposure to themes, trends, and investment opportunities. Further, there is intense competition among issuers to continue bringing new products onto the market, especially given first-mover advantages.

BMO is particularly bullish on structured outcome ETFs, which were created to help investors manage risk. It believes that investors in equity funds and short-term bond funds are exposed to volatility given the outperformance of megacap, technology stocks over the past year and uncertainty around the Fed’s rate cuts.

Structured outcome ETFs are one way that clients can remain invested while capping downside risk. Among these, buffer ETFs, which use options that protect against downside risk and cap upside potential, are becoming increasingly popular among advisors and investors. Notably, this type of protection was at one time only available to high net worth investors.

Finsum: BMO Asset Management conducted an overview of the ETF industry. It notes the constant innovation in the space, with the latest growth area being structured outcome ETFs, which are particularly useful in terms of reducing portfolio risk.