October 27, 2010

Symetra Reports Strong Q3 Earnings

'Underwriting discipline' led to improvements

Symetra Financial Corp. reported Wednesday third quarter net income of $56.6 million, or $0.41 per diluted share, up from $44.1 million in third quarter 2009.

“Symetra turned in a solid third quarter, demonstrating financial and underwriting discipline to moderate the effects of low interest rates and challenging market conditions,” said Tom Marra, Symetra president and chief executive officer, in a press release.

The retirement services group posted pretax adjusted operating income of $22.5 million, driven by interest spreads on increased account values and lower cash balances, according to the company. Total account values hit a "record high" of $9.5 billion, up from $8.2 billion one year ago.

Sales in the retirement services group fell, however, to $286.4 million from $486.9 million one year ago. According to Symetra, the "low interest rate environment" drove the drop in sales, especially of fixed annuities. Sales of income annuities fell as well, dropping from nearly $71 million to $58 million in third quarter 2010. Again, low interest rates contributed to the drop, combined with competition in other markets.

The income annuities segment reported pretax adjusted operating income of $9.5 million, up from $8.3 million in third quarter 2009. Lower cash balances led to the improvement, as well as an increase in originations of commercial mortgage loans.

Net realized investment gains for the third quarter of 2010 were $20 million, up from just $11.3 million in 2009. At $15.2 million, net gains for the company's equity portfolio were significantly less than third quarter 2009 net gains of $21.6 million. Impairment losses in the bond portfolio were much lower than one year ago, though, at $3.5 million for the third quarter of 2010.

The individual life insurance segment posted a slight drop in operating income, falling to $15.3 million compared with $15.9 million one year ago. Higher claims, which cut into bank-owned life insurance margins, account for the slip, as well as an increase in deferred acquisition cost amortization.

Symetra's book value increased to $19.77 per share up from $17.08 per share at the end of the second quarter. Adjusted book value per share, as converted, was $15.38, according to the company.

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