IRI Sees Strong Sales of Plain-Vanilla Fixed Annuities

What You Need to Know

Sales of all individual annuities increased 7.4%, to about $59 billion.
Variable annuity assets under management rose 1.2%.
Variable annuity stock fund holdings climbed by $57 billion.

A new U.S. individual annuity market report shows that sales of plain-vanilla fixed products soared in the fourth quarter of 2021.

Sales of book value fixed annuities increased 50% between the fourth quarter of 2020 and the latest quarter, to $6.6 billion, according to the Insured Retirement Institute.

A book value annuity is a traditional fixed annuity. It pays the same rate of return even if the holder withdraws money before the end of the annuity contract period.

Life insurers also sell another type of slightly spicier fixed annuity — the market-value-adjusted annuity.

When the holder of an MVA annuity takes cash out before the contract period ends, the insurer will change the interest rate applied to the contract value to reflect changes in interest rates.

Sales of MVA annuities fell 50%, year over year, to $3.7 billion.

The IRI Data

IRI is a Washington-based group for all kinds of companies with an interest in annuities and other insured income strategies, such as life insurers, asset managers, broker-dealers, banks, marketing organizations, law firms and annuity market support services vendors.

IRI gets its variable annuity data from Morningstar Inc. and its fixed annuity data, including data for indexed annuities filed as non-variable products, from Beacon Annuity Solutions.

Both Morningstar and Beacon collect data on registered indexed-linked annuities — variable annuities with crediting rates linked to the performance of one or more investment indexes, rather than to the performance of investment funds.

IRI reports the RILA figures together with the variable annuity totals.

Because the IRI report is for the fourth quarter of 2021, it does not reflect the effects of the turmoil caused by Russia’s invasion of Ukraine, which began Feb. 24.

Overall Results

IRI says overall individual annuity sales increased 7.4%, year over year, to about $59 billion.

Sales of all types of annuities classified as fixed, including book value annuities, MVA annuities and non-variable indexed annuities, increased 0.9%, to $28 billion.