Variable Annuities Get Their Second Wind
August 22, 2018 by Cheryl Winokur Munk
Variable annuities still lag in popularity compared with their fixed annuity cousins, but they are finally showing signs of life.
After 17 consecutive quarters of declines, variable annuity sales rose 2% to $25.8 billion in the second quarter from the previous three months, Limra said in a press release Tuesday. Product enhancements, the vacated DOL fiduciary rule and better economic conditions combined to give variable annuities the much-needed lift, according to Limra.
Click HERE to read the original story via Barron’s.
Industry watchers told InvestmentNews that fiduciary rule’s demise had the most potent effect on variable annuity sales in the quarter. The rule had made it much more difficult for insurers and brokers to sell commission-based variable annuities.
To put things in perspective, a decade ago quarterly sales were above $40 billion, Todd Giesing, Limra’s director of annuity research, tells the publication. Sales had started to taper off anyway, but the DOL rule exacerbated the decline, Giesing said. Variable annuity sales in individual retirement accounts fell 16% in 2017, due to the regulation, according to InvestmentNews, citing Limra data.
Overall, annuities had a solid quarter. Total annuity sales were $59.5 billion, 10% above year-earlier levels and 15% percent higher than the first quarter. The last time sales were at this level was in the first quarter of 2015, according to Limra.
