As we dive into the dynamic world of the US annuity market, I’m thrilled to sit down with Simon Glairy, a renowned expert in insurance and Insurtech, with deep expertise in risk management and AI-driven risk assessment. With annuity sales shattering records and innovative products reshaping the landscape, Simon offers a unique perspective on what’s fueling this growth and where the industry is headed. In our conversation, we explore the economic forces behind record-breaking sales, the surge in specific annuity products like fixed-rate deferred and fixed indexed annuities, and the evolving preferences of investors seeking guaranteed income in retirement.
How do you see the recent surge in US annuity sales, particularly the 8% year-over-year jump to $119.5 billion in Q2 2025, reflecting broader trends in the financial landscape?
I think this surge is a clear signal of how much people are craving stability in uncertain times. That 8% jump to $119.5 billion in just one quarter shows a growing reliance on annuities as a safe harbor for retirement planning. A lot of this comes down to economic volatility—folks are worried about market swings, inflation, and even policy changes that could affect their savings. Annuities, with their promise of guaranteed income, are becoming a go-to solution. Plus, with interest rates in a sweet spot, the returns on these products look more attractive than they have in years.
What does the milestone of $226.1 billion in total annuity sales for the first half of 2025 tell us about the long-term direction of the market?
Hitting $226.1 billion in just six months is a massive indicator that annuities aren’t just a passing trend—they’re becoming a cornerstone of retirement planning. This kind of consistent growth, especially following record-breaking years, suggests that both consumers and advisors are recognizing the value of protected income streams. Over the long term, I see this as a shift toward more conservative financial strategies, where people prioritize security over high-risk, high-reward investments, especially as the baby boomer generation continues to retire in droves.
With LIMRA forecasting annuity sales to exceed $400 billion in 2025, what key factors give you confidence in this bold prediction?
I’m pretty confident in that forecast because the fundamentals are strong. First, you’ve got favorable economic conditions like stable interest rates that make annuity products more appealing. Second, there’s been a wave of product innovation—new designs and features are meeting consumer needs better than ever. And finally, awareness is growing. More advisors are educating clients about the benefits of guaranteed income, and that’s driving demand. If these trends hold, and I believe they will, surpassing $400 billion feels like a realistic target.
Can you unpack the economic conditions that are currently boosting annuity sales, and how they’re influencing consumer behavior?
Absolutely. Right now, we’re seeing a combination of higher interest rates and lingering inflation concerns pushing people toward annuities. Higher rates mean better payouts on fixed products, which is a big draw. At the same time, inflation has folks worried about outliving their savings, so they’re looking for solutions that lock in income for life. Add to that the market volatility we’ve experienced recently, and it’s no surprise consumers are leaning toward products that offer protection and predictability over speculative investments.
How have systemic changes in the market, such as product innovation and capitalization, contributed to the annuity boom over recent years?
Systemic changes have been huge. Product innovation, for instance, has made annuities more flexible and appealing—think features like customizable income streams or better upside potential with downside protection. On the capitalization side, insurers have strengthened their balance sheets, which allows them to offer competitive products and take on more business. This isn’t just about tweaking existing offerings; it’s about rethinking how annuities fit into modern retirement plans, making them more accessible and attractive to a broader audience.
Focusing on fixed-rate deferred annuities, what’s driving the impressive 11% growth to $45.2 billion in Q2 2025?
The 11% growth in fixed-rate deferred annuities comes down to their simplicity and security. With sales hitting $45.2 billion in a single quarter, it’s clear that investors are drawn to the guaranteed returns these products offer, especially in a climate where interest rates are favorable. People want to lock in those rates now before they potentially drop. It’s also about timing—many are deferring income to future years for tax advantages or to align with retirement, and FRDs fit that strategy perfectly.
Do you believe the momentum behind fixed indexed annuities, with sales doubling since 2020 to $32.8 billion in Q2 2025, will continue to shape investor preferences?
I do think fixed indexed annuities will keep gaining traction. Their sales doubling since 2020 to $32.8 billion shows how much investors value the balance of growth potential tied to market indices with protection against losses. It’s a middle ground for those who want some exposure to market gains but can’t stomach the risk of a full downturn. As long as market uncertainty persists—and I suspect it will for a while—FIAs will remain a compelling choice for a wide range of investors.
Turning to registered index-linked annuities, what’s fueling their record-breaking sales of $19.1 billion in Q2 2025, and why are they resonating so strongly with consumers?
RILAs hitting $19.1 billion with a 15% year-over-year increase is remarkable, and it’s largely because they strike a unique balance. They offer protected growth with caps and participation rates that can be really attractive, especially compared to traditional variable annuities. Consumers like the idea of having some skin in the game with market-linked returns while still having a safety net. Plus, with new players entering the space and rolling out innovative products, there’s more variety and competition, which keeps driving interest.
As RILA sales have outpaced traditional variable annuities, how do you see this shift impacting the broader annuity market in the coming years?
This shift toward RILAs over traditional variable annuities signals a broader move toward hybrid products that blend growth and protection. It’s reshaping the market by pushing insurers to innovate further and cater to investors who want more control and upside potential without full exposure to market risk. Over the next few years, I expect this trend to accelerate, potentially marginalizing older variable annuity designs unless they adapt. It’s a wake-up call for the industry to keep evolving.
What is your forecast for the future of the US annuity market, especially considering the rapid evolution of products and consumer needs?
Looking ahead, I see the US annuity market continuing to grow, potentially surpassing even the most optimistic forecasts if economic conditions remain supportive. Products like RILAs and FIAs will likely lead the charge as they cater to a growing demand for balanced risk and reward. I also anticipate more tech-driven personalization—think AI tailoring annuity offerings to individual needs. But the core driver will be the ongoing need for retirement security. As long as people are worried about outliving their savings, annuities will have a central place in financial planning.
