The market volume of annuity purchases by Canadian defined benefit pension plan sponsors reached an estimated $2.5 billion in the second quarter of 2024, compared to $1.1 billion in the previous quarter, according to a new report by Telus Health.
While plan sponsors that are poised for upcoming transactions have an advantageous position, insurers are becoming more selective in their deal making, pushing meticulous preparation on the part of plan sponsors considering de-risking their plans through annuity purchases, noted the report.
Looking forward, the report anticipated “a burst of activity” between September and November. “Numerous quotes of various sizes and specifications are already locked in the pipeline of Canadian insurers for this period. As a result, many expect that the volumes achieved in recent years will be significantly surpassed, especially given the substantial head start in the first half of 2024.”
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A separate report by LIMRA found pension risk transfer sales in the U.S. reached US$109.9 billion in Q2, representing a 26 per cent increase from the previous quarter. Sales for fixed indexed annuity and registered index-linked annuities saw record quarterly sales, totalling $30.7 billion and $16.3 billion, respectively.
Total fixed-rate deferred annuity sales reached $40.7 billion, while traditional variable annuities sales were $15.4 billion. Single premium immediate annuity sales totalled $3.4 billion and deferred income annuity increased to $1.3 billion.
In a press release, Bryan Hodgens, senior vice-president and head of LIMRA research, said annuity sales have seen 15 consecutive quarters of growth. “The U.S. annuity market continues to break sales records as the need for guaranteed retirement income grows.”
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