Segregated fund sales are on a roll, LIMRA's quarterly report on individual annuity sales in Canada confirms. Calculated in terms of premiums, sales of segregated funds (called "variable annuities" in the U.S.) reached $3.5 billion in first quarter 2021, representing 13 per cent growth over Q1 2020.
In contrast, fixed annuity sales plummeted. Also in terms of premiums, they were $431 million in first quarter 2021, a 27 per cent decline compared with Q1 2020.
Sales of products that combine segregated funds and annuities in a single contract have exploded. In first quarter 2021, premiums for these products were $1.8 billion, equal to growth of 34 per cent.
Rates and stock market returns mirrored
“The continuing low interest rates are reflected in a decrease in fixed annuity contract sales compared with one year ago, while the growth in the stock market is mirrored with increasing segregated fund and combination contract sales,” explains Sally Bryck, associate research director at LIMRA's Secure Retirement Institute.
Insurers' annuity assets totaled $147.7 billion at the end of first quarter of 2021. Although this growth represents a mere 1 per cent advance from December 31, 2020, it is a sharp increase from the low point in Q1 2020, when assets shrank to $128 billion.
After the peak in 2020
The first quarter of 2021 heralds good momentum for the current year, with total annuity sales of $5.7 billion. Sales volume for annuities peaked at $16.6 billion in 2020.
