The Canadian Individual Annuity Sales report for the fourth quarter of 2021 released by the Secure Retirement Institute (SRI) finds that annuity sales reflected the economic and financial environment in 2021.
LIMRA’s Associate Research Director responsible for the SRI report, Sally A. Bryck points out that interest rates finished 2021 flat, while equity markets continued in a positive manner.
“Results for the fourth quarter of 2021 responded accordingly; fixed annuity contract sales were down while segregated fund and combination contract sales were up compared with the same quarter one year ago,” she explains.
Bryck added that sales of combined annuities also increased in the fourth quarter of 2021, compared with 2020. Sales of these annuities largely went toward segregated funds (84 per cent), followed by fixed annuities (16 per cent).
Bryck mentions that total sales in 2021 followed the same trajectory as sales in Q4 2021. She adds that fixed annuity sales have been flagging, while segregated fund and combined annuity sales have been growing, compared with 2020.
Thirteen companies reported fixed annuity results to SRI, 10 reported segregated fund results and 7 shared combined annuity results.
Segregated funds capture lion's share
For all products combined, annuity sales rose to $20.8 billion in 2021, including $5.7 billion in Q4 of 2021. Segregated funds reaped the lion's share of sales reported by their carriers in both comparison periods.
SRI’s rounded data, which include combination annuities, show that segregated fund sales totalled $18.1 billion in 2021, compared with $2.6 billion for fixed annuity sales.
Payout most popular in fixed products...
In 2021, 62 per cent of fixed annuity sales went to payout products. Of these sales, 56 per cent were in payout annuities and 6 per cent in vehicles such as registered retirement income funds (RRIFs) and life income funds.
... vs. accumulation in segregated funds
The segregated funds situation is quite different: 82 per cent of sales went into accumulation products. Of this number, 33 per cent of investors chose RRSPs, 37 per cent non-registered funds and 12 per cent Tax-Free Savings Accounts (TFSAs). In payout product sales, RRIFs accounted for 12 per cent and life income funds 6 per cent.
In combined annuity sales, accumulation products predominated, at 91 per cent, broken down into 35 per cent for registered combined annuities, 33 per cent for non-registered combined annuities and 23 per cent for TFSAs. Registered payout vehicles represented 9 per cent of combined annuity sales, split between life income funds (6 per cent) and RRIFs (3 per cent).
Bryck also noted that total annuity assets grew by 4 per cent between the third and fourth quarters of 2021, to $160.7 billion.
