IRI Issues First-Quarter 2016 Annuity Sales Report

Fixed Annuities Reach Highest Mark in Seven Years as Robust Fixed Indexed Annuity Sales Continue

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final first-quarter 2016 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Industry-wide annuity sales in the first quarter of 2016 totaled $56.7 billion, a 7.6 percent increase from $52.7 billion during the first quarter of 2015, but a 4.1 percent decrease from $59.1 billion in the fourth quarter of 2015. 

According to Beacon Research, fixed annuity sales during the first quarter of 2016 were at their highest level in seven years. Sales of fixed annuities reached $30.7 billion, a 47.2 percent increase from sales of $20.9 billion during the first quarter of 2015, and an increase of 8.8 percent compared to sales of $28.2 billion during the fourth quarter of 2015. Variable annuity total sales decreased to $26 billion in the first quarter of 2016, according to Morningstar. This was an 18.5 percent decline from $31.8 billion in the first quarter of 2015 and a 16 percent decline from $30.9 billion in the prior quarter. 

“We are seeing the dynamics of an ever-changing market, where a full suite of strategies are now being employed to provide guaranteed lifetime income,” IRI President and CEO Cathy Weatherford said. “Retirement planning is now more than ever multidimensional. As a result, we are seeing a broadened product shelf being used in a holistic way to solve for a wide array of individual needs. An ever growing suite of retirement income products – including income annuities, fixed-rate annuities, and both fixed indexed and variable annuities with guaranteed living benefits – are available to advisors to help their clients address the various risks they face in retirement, including longevity risk, sequence of returns risk, inflation risk, and liquidity risk.”

According to Beacon Research, strong quarterly sales were once again largely supported by robust sales of fixed indexed annuities. Fixed indexed annuity sales reached their second highest quarterly sales mark on record, totaling $15.6 billion in the first quarter of 2016. This represents a 34.9 percent increase from sales of $11.6 billion in the first quarter of 2015, but a 2.8 percent decrease from record sales of $16.1 billion in the prior quarter. Sales of market value adjusted (MVA) annuities – a type of fixed-rate annuity – soared during the first quarter. Sales of MVA annuities reached $5.3 billion during the first quarter of 2015, a 163.9 percent increase from sales of $2 billion in the first quarter of 2015 and a 66.5 percent increase from sales of $3.2 billion in the previous quarter. For the entire fixed annuity market, there were approximately $17.5 billion in qualified sales and $13.2 billion in non-qualified sales during the first quarter of 2016.

“Fixed annuity sales have increased for the fourth straight quarter,” said Beacon CEO Jeremy Alexander. “On a year-over-year basis, sales are up 47.2 percent or $9.8 billion, and 71 percent of that increase occurred in the bank and broker dealer channels, which have been the primary drivers of fixed annuity growth since early 2011. This is a trend we expect to continue as more customers of financial institutions move closer to and into retirement, and seek products that offer competitive yield and comparative safety.”

[Click here to access complete fixed annuity sales data in the PDF version of this release.]

According to Morningstar, variable annuity net assets increased slightly in the first quarter of 2016, reaching $1.87 trillion. This represents a 0.2 percent increase from the end of the fourth quarter of 2015. Within the variable annuity market, there were $18.3 billion in qualified sales and $7.7 billion in non-qualified sales during the first quarter of 2016. 

“It appears that a rough start for the markets in 2016 had a significant impact on first quarter sales,” said Kevin Loffredi, Senior Product Manager at Morningstar. “In particular, we saw a 28 percent drop in sales from December to January. However, in February and March, we saw healthy gains in month-over-month sales of 15.4 percent and 5.2 percent, respectively, as markets stabilized and then recovered.”

[Click here to access complete variable annuity sales data in the PDF version of this release.]

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, and retirement plan providers and sponsors. Morningstar provides data on more than 510,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 17 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement and management as of Dec. 31, 2015. The company has operations in 27 countries.

About Beacon Research: Beacon Research 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 a decade’s worth of sales information available to subscribers online Beacon lowers compliance risk and increases fixed annuity sales with 100% 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 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 can be accessed by 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 of 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