U.S. annuity sales plunge in third quarter

By The IJ Staff | November 29 2017 01:30PM

Photo: Freepik

Total U.S. annuity sales stood at $46.8 billion in Q3 2017. This is a decline of 13 per cent compared to the same quarter last year, according to LIMRA Secure Retirement Institute’s Third Quarter 2017 U.S. Retail Annuity Sales Survey.

In an announcement issued Nov. 29, the Institute observed that this is the first quarter in 15 years (since 2002) that sales have dropped below the $50-billion mark. Q3 2017 was the sixth consecutive quarter of decline in overall annuity sales. 

Department of Labor’s fiduciary rule

“Despite strong economic indicators, both variable and fixed annuities fell short of last year’s sales results,” said Todd Giesing, director, Annuity Research, LIMRA Secure Retirement Institute.  “Looking closer at the third quarter sales decline, we are confident the initial implementation of the Department of Labor’s fiduciary rule on June 9th had a negative effect on sales, particularly on IRA contracts.”

For the first nine months of the 2017, total annuity sales were $152.7 billion. This is a decline of 11 per cent compared to the same period of 2016, say the report.

Improvement expected in 2018

The Institute predicts overall annuity sales to be around $200 billion at the end of 2017. “This has been a challenging year for the individual annuity market, but we expect the environment to improve in 2018,” Giesing noted.