The fourth quarter wasn't kind, but overall sales of all types of annuities rose in 2014, with fixed annuities making the best annual showing since 2009.
Industry-wide annuity sales in the final quarter of 2014 reached $56.6 billion, a 0.5 percent decrease from $56.9 billion in the previous quarter and a 4.6 percent dip from $59.3 billion in the fourth quarter of 2013.
Despite the slight drop, industry-wide sales were up for the full year, reaching $229.4 billion in 2014, a 3.8 percent increase from $220.9 billion in 2013 and an 8.2 percent increase from $212 billion in 2012.
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Let's go inside the numbers to find out what annuity types fared best and which are in need of a boost.
Fixed annuities
Fixed annuity sales totaled $23 billion in the fourth quarter, according to Beacon Research. This was a 6.3 percent increase from just under $21.7 billion during the previous quarter but a 2 percent drop from $23.5 billion in the fourth quarter of 2013.
For the year, fixed annuity sales closed out their best year since 2009, surpassing the $91.5 billion mark. This was a 17.2 percent jump from sales of $78.1 billion in 2013.
This strong growth was supported by record sales years for fixed indexed annuities and income annuities.
"The big story in 2014 was the $4.8 billion surge in fixed indexed annuity sales through independent broker-dealers," Beacon Research President Jeremy Alexander said. "Much of this 411 percent increase was due to the popularity of living benefit riders. In addition, for the first time since Q3 2013, quarterly sales of fixed annuities experienced a rise in sales across all product types."
Variable annuities
Variable annuity sales in the fourth quarter came to $33.6 billion, according to Morningstar. This was a 4.6 percent drop from $35.2 billion in the third quarter of 2014 and a 6.2 percent decline from $35.8 billion in the fourth quarter of 2013.
For 2014, variable annuity total sales were $137.9 billion, a 3.4 percent drop from $142.8 billion in 2013.
Deferred income offerings
Just good news here.
As Cathy Weatherford, IRI President and CEO, put it: "Not only was 2014 a year of growth in terms of sales, but also a year of growth in terms of the lifetime income offerings available in the marketplace. The year witnessed the continued expansion of deferred income annuities, regulators greenlighting qualifying longevity annuity contracts, and further development of investment-only variable annuities. With demand on the rise, and a wider array of products available in 2015 to meet consumers' varying needs, we anticipate robust market activity in 2015."
Income annuity sales
Income annuity sales also closed out a record year. Sales of income annuities reached $3.2 billion during the fourth quarter, pushing full-year sales above the $13 billion mark – an 18 percent increase from $11 billion in 2013.
For the entire fixed annuity market, there were approximately $13 billion in qualified sales and $10 billion in non-qualified sales during the fourth quarter of 2014.
For the full year, there were approximately $50.9 billion in qualified sales and $40.6 billion in non-qualified sales.
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