Three life insurers report fourth-quarter profits

Earnings season continues

Ameriprise, Lincoln Financial and Fidelity & Guaranty Life all posted lower annuity sales. (Photo: Allison Bell/LHP) Ameriprise, Lincoln Financial and Fidelity & Guaranty Life all posted lower annuity sales. (Photo: Allison Bell/LHP)

Three midsize life insurers seem to have taken a different approach to the derivatives market than MetLife Inc. did in the fourth quarter. 

Lincoln National Corp., Ameriprise Financial Inc. and Fidelity & Guaranty Life all reported positive net income for the quarter.

Last week, MetLife posted a $2.1 billion net loss. The company blamed the loss on the effects of the interest rate rebound, foreign currency exchange rate fluctuations and stock market volatility on its derivatives-based hedging operations.      

Related: Insurers earn investor ire

Radnor, Pennsylvania-based Lincoln National, which is better known as Lincoln Financial Group, is reporting $190 million in net income for the latest quarter on $3.3 billion in revenue, compared with $283 million in net income on $3.2 billion in revenue for the fourth quarter of 2015.

Minneapolis-based Ameriprise is reporting $400 million in net income for the latest quarter on $3.1 billion in revenue, compared with $380 million in net income on $3.1 billion in revenue for the year-earlier quarter.

Des Moines, Iowa-based Fidelity & Guaranty is reporting $108 million in net income for the latest quarter on $340 million in revenue, up from $48 million in net income on $329 million in revenue.

At Lincoln, sales of most individual life insurance and group protection products other than variable universal life increased significantly. Sales of the company's MoneyGuard product, which can be used as an alternative to traditional long-term care insurance, increased 19 percent, to $64 million.

Lincoln's sales of fixed annuities fell 37 percent, to $411 million, and sales of variable annuities fell 41 percent, to $1.4 billion.

At Ameriprise, sales of universal life and variable universal life fell 3 percent, to $88 million. Fixed annuity deposits fell to $34 million, from $63 million, and variable annuity deposits fell to $1.1 billion, from $1.3 billion.

At Fidelity & Guaranty, indexed annuity sales fell to $437 million, from $551 million. Sales of indexed universal life increased to $17 million, from $13 million.

Dennis Glass, president of Lincoln, acknowledged that uncertainty about the U.S. Department of Labor's fiduciary rule has hurt, but he said during a conference call with securities analysts, which was streamed live on the web, that he believes the uncertainty will soon go away.

"I continue to believe that, long-term the individual annuity market is going to be robust and vibrant," Glass said.

Jim Cracchiolo, chairman of Ameriprise, said during that company's conference call that his company has seen a clear shift to more use of fee-based compensation arrangements.

Cracchiolo said Ameriprise hopes to attract more upmarket clients, and clients with advisors who add more value. The advisors need to help the clients set goals and manage their finances, not simply put together portfolios and then leave clients to fend for themselves, he said.

At the variable annuity operation, "sales were down in the quarter," Cracchiolo said. "But from what we're seeing, our numbers are better than the industry, given our financial planning focus."

Related:

Derivatives hit contributes to $2.1 billion MetLife net loss

Hartford said to enlist JPMorgan to sell annuity runoff business

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