Individual annuity premiums and considerations touched their highest quarterly levels in more than a decade during the second quarter, helping to push total annuities for the life insurance industry up year over year in the period.
U.S. life insurance total annuity premiums and considerations were $90.87 billion in the second quarter, or 1.9% higher than the same period of 2018, according to an S&P Global Market Intelligence analysis. Ordinary, more commonly referred to as individual, premiums and considerations were $57.23 billion in the quarter. That marked the first time the industry topped $57 billion in a quarter since the fourth quarter of 2008. Group premiums, however, fell 8.2% year over year to $33.65 billion.

The year-over-year drop in group premiums and considerations can largely be attributed to a single transaction that occurred in May 2018 in which MetLife Inc. assumed about $6 billion in pension obligations from FedEx Corp. That was the biggest pension risk transfer in all of 2018.
The deal led to MetLife being the largest annuity underwriter in the second quarter of 2018, with $7.79 billion in total premiums and considerations. Of that total, $7.64 billion was from the group line of business. The insurer's group premiums and considerations were $2.37 billion in the second quarter of 2019, with total premiums of $2.53 billion, ranking MetLife as the 17th-largest underwriter in the period.
Prudential PLC's U.S.-based Jackson National, American International Group Inc., Aegon NV's Transamerica, and New York Life Insurance Co. all saw double-digit year-over-year declines in group premiums and considerations during the second quarter.

On the other hand, Jackson National reported the largest individual premiums and considerations at $4.34 billion, 9.7% higher than the prior-year period. Jackson National new sales have traditionally come from its variable annuity products. However, index annuities are beginning to make up a larger portion of new sales this year.
Michael Falcon, CEO of Jackson National, in an August earnings call said fixed and index annuities made up almost 20% of year-to-date sales, up from only 5% during the same period in 2018.
AIG's individual premiums and considerations grew by 14.7% year over year to $4.26 billion. Fixed and index annuities were strong in the quarter, but both product lines were lower than the previous quarter, according AIG's latest financial supplement. Kevin Hogan, AIG's CEO of life and retirement, on an August earnings call said it expects to record weaker sales in fixed annuities due to declining interest rates.
Prudential Financial Inc. tallied $6.95 billion in total annuity premiums and considerations during the quarter, the most of any insurer and 31.6% higher than the year-ago period. Prudential Financial saw increases in its group and individual premium considerations of 37.2% and 23.1%, respectively.
In addition to AIG and Prudential Financial, seven of the 15 largest annuity underwriters had year-over-year growth in their individual annuity lines of business of more than 10%: Lincoln National Corp., Transamerica, Massachusetts Mutual Life Insurance Co., Allianz Group's U.S.-based insurers, AXA Equitable Holdings Inc., Pacific Mutual Holding Co., and Global Atlantic Financial Group Ltd.
Individual annuities refer to fixed and variable annuities and is reported as ordinary within NAIC statutory statements. Group annuities include investment options typically available in tax-advantaged savings accounts and guaranteed investment contracts.
S&P Global Market Intelligence uses statutory total annuity considerations to determine market share. Total annuity consideration is a preferred indicator of market share as it not only reflects new business but also the persistence of a company's existing business in the form of renewal annuity considerations. Additionally, many policyholder acquisition costs are not recovered within one year. As such, total annuity considerations can also be a better indicator of profitability for life insurers, whereas new sales do not necessarily equate with profitability.
