In Q3 2018, segregated fund premiums sold were down 4% compared to the same quarter in 2017, to reach $2.2 billion, says the latest LIMRA report on annuity sales in Canada.
For the first nine months of 2018, segregated funds racked up sales of $7.3 billion in terms of premiums. This represents an 8% decline compared with the same period in 2017.
LIMRA’s results concern both accumulation segregated funds and the payout products that follow when the funds reach maturity. The same also applies to the fixed annuity category. It represents term deposits in the accumulation phase and the payout products that follow. The third category is a product that combines fixed annuities and segregated funds.
Fixed annuities and combinations popular
In fixed annuities (term deposits), sales grew 17% in Q3 2018 compared with the same quarter in 2017, to reach $514 million. From January 1 to September 30, 2018, fixed annuity sales advanced 13% compared with the same period in 2017, amounting to $1.6 billion.
Sales of products that combine segregated funds and fixed annuities climbed 5% in Q3 2018 compared with the same quarter of 2017, to reach $784 million. From January 1 to September 30, 2018, sales of these combinations were up 7% from the same period in 2017, totalling $2.6 billion.
Where is the money going?
In the first three quarters of 2018, segregated fund sales in terms of premiums can be broken down as 42% to RRSP funds, 32% to nonregistered funds, 11% to registered retirement income funds (RRIF), 10% to tax-free savings accounts (TSFA) and 5% to life income funds (LIF).
During this period, sales of fixed annuities mainly flowed to immediate annuities (60%). The rest of the premiums sold are distributed between accumulation term deposits (35%) and the RRIF/LIF category (5%).
The lion’s share of the premiums resulting from combined product sales went toward segregated funds (86%). Fixed annuities account for the remaining 14%.
At the end of Q3 2018, total annuity assets in Canada slightly exceeded $139.1 billion. This volume remained stable: in Q3 2018 assets edged down by less than half a percent compared with the same quarter in 2018.