INFRONT
Annuity Sellers Face Rolling Economic Headwinds Interest rate hikes planned by the Federal Reserve may prove to be a massive disruption. By John Hilton
T
he first weeks of 2022 gave investors the shivers as stock shares plunged amid geopolitical fears, inflation, COVID-19, and interest rate hikes. The Dow Jones Industrial Average fell about 7% before beginning a slow rebound in the last days of January. A series of interest rate hikes planned by the Federal Reserve might be the biggest disruption of all, analysts say. “The largest driver of this move has been the intensified level of uncertainty. The usual suspects for this uncertainty have been the Fed and their rate hike plans, hot inflation, and slowing growth,” wrote Lindsey Bell, chief money and markets strategist for Ally. Annuity sales are influenced by a whole range of economic factors, including market performance and interest 4
InsuranceNewsNet Magazine » March 2022
rates. While annuity sales rebounded strong from a pandemic-influenced dip in 2020, the outlook for the rest of 2022 remains murky, analysts say. In addition to interest-rate uncertainty, inflation concerns linger, and regulatory changes are causing disruption among distribution channels. It could all add up to a difficult sales year for annuities. But executives like Doug Wolff, president of Security Benefit Life, are banking on the power of annuities to deliver retirement security. “I think it will be a good year for annuity sales, even if some of the things we’re talking about — the potential for higher inflation, the potential for a market pause or correction — come into play,” Wolff said. “Because in some ways, they will just remind people of some of the power of annuities — being able to save, invest and accumulate dollars
in a relatively safe way.”
Strong Rebound
Growing annuity sales in 2022 will prove difficult simply because 2021 sales were so strong. Total annuity sales totaled $254.8 billion in 2021, up 16% from 2020. It was the best year for annuity sales since 2008 and the third-highest sales recorded in history, according to preliminary results from the Secure Retirement Institute U.S. Individual Annuity Sales Survey. Total annuity sales were $63.4 billion in the fourth quarter, 8% highDoug Wolff er than fourth-quarter 2020. “Strong equity market growth in the fourth quarter and in 2021 propelled double-digit growth in both traditional variable annuity and registered index-linked annuity sales, resulting in
