WASHINGTON, D.C. – Sales of fixed and variable annuities ended the year at $207.5 billion, down 8.9 percent from 2019 sales of $227.8 billion, according to the Insured Retirement Institute (IRI), which today announced final full year 2020 market data for the U.S. annuity industry based on data reported by Beacon Annuity Solutions and Morningstar, Inc.
While much of the year-over-year drop can be attributed to the pandemic, sales have steadily recovered throughout the year, with fourth-quarter total annuity sales of $54.5 billion exceeding fourth quarter sales of $53.5 by almost 2 percent. Total fixed annuity sales were down 13.7 percent to $111.7 billion for the year, compared to $129.5 billion in 2019. Variable annuity sales fell only 2.6 percent, to $95.8 billion compared to $98.3 billion in 2019, on strength in Registered Index-Linked Annuities (RILAs), especially in the second half of the year.
Book value fixed annuity sales fell slightly while market value adjusted (MVA) annuities saw a huge increase as investors continued to hunt for higher yield, especially in the third and fourth quarters as interest rates plunged to historic lows. Book value sales fell 3 percent for the year, to $24.5 billion from 2019 sales of $25.2 billion, but were down 22.3 percent in the fourth quarter compared to the fourth quarter of 2019.
MVA sales were up 23.2 percent for the year ($24.5 billion versus $19.9 billion in 2019) but were up 116.8 percent in the fourth quarter versus the fourth quarter of 2019.
Fixed indexed annuity sales were down 23.5 percent for the year, and income annuity sales were off 37.9 percent and impacted by the ultra-low interest rate environment.
Sales of variable annuities other than RILAs (variable annuities that use index options to provide both upside potential and downside protection, but not a full guarantee of principal) fell 11.1 percent to $71.8 billion from 2019 sales of $80.8 billion. RILA sales rose 36.3 percent to $23.9 billion from 2019 sales of $17.6 billion.
In the fixed market, $58.1 billion of sales were in qualified plans, and $53.6 billion were in non-qualified in 2020. Within variable annuity sales, $61.6 billion were in qualified plans and $34.1 billion were in non-qualified.
According to Morningstar, variable annuity net assets rose 4.4 percent in 2020, to $2,105.8 billion from $1,952.3 billion in 2019 on solid equity market performance. Assets in equity funds increased 12.8 percent, while allocation funds rose 8.6 percent. Net asset flows in variable annuities were -$75.9 billion in 2020, down significantly from 2019 net asset flows of -$90.3 billion.
Click here for tables providing a detailed breakdown of annual and quarterly sales by annuity type and variable annuity assets by investment category.
# # #
Contact: Dan Zielinski
About Morningstar, Inc.: Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of December 31, 2020. The company has operations in 27 countries.
About Beacon Annuity Solutions: Beacon Annuity Solutions is an independent research company and application service provider founded in 1997 and based in Northfield, Ill. Beacon tracks fixed and variable annuity features, rates and sales. Its quarterly Fixed Annuity Premium Study is the first and only source to analyze fixed annuity sales at the product level, and the first to make over 15 years of sales information available to subscribers online at www.annuitymarketstudy.com. Beacon lowers compliance risk and increases fixed annuity sales with 100 percent carrier-approved, comprehensive product profiles, spreadsheets and search tools for the advisor/rep websites of banks, TPMs, broker-dealers and marketing organizations. Carriers and financial institutions use its systems at www.annuitynexus.com for compliance review of 1035 exchanges, sales support, conservation and product research. Beacon also licenses information to other platforms. Directly and through licensees, Beacon information is accessible to hundreds of financial institutions and thousands of advisors.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of 40 organizations and is the only association that represents the entire supply chain f insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.