A strong first half of 2011 drove US annuity sales to a solid year-end finish.
Annuity sales reached $240.3 billion in 2011 in the United States, an 8% increase over 2010. Published in LIMRA’s latest quarterly report, this data represents 94% of the US market.
Similar to our segregated funds, variable annuities posted sales gains of 13% between 2010 and 2011, to reach $159.3 billion.
“While we saw significant growth in the first half of 2011, third and fourth quarter annuity sales fell quarter-over-quarter, tempering the double-digit growth seen at the mid-year mark,” Joseph Montminy, LIMRA assistant vice president, annuity research explains, adding that “in this economic environment, VA companies are carefully managing the risks associated with their guaranteed living benefit riders, which has had an impact on overall sales trends.”
Sales of variable annuities stagnated in the fourth quarter, after six consecutive quarters of growth.
Immediate annuities are being fueled by demographics. Their sales peaked at $8.1 billion in 2011, equal to growth of 7% since 2010. “There are currently more than 42 million retirees in the U.S. and the number is expected to grow to 65 million by 2025,” Mr. Montminy adds. “Many of these retirees need to establish a guaranteed income stream that immediate annuities can provide. We anticipate demand for this product will grow for many years to come.”