NU Online News Service, July 16, 2003, 5:19 p.m. EDT – The Allstate Corp., Northbrook, Ill., says problems with variable annuity sales, mortality rates and investment earnings hurt profits at its Allstate Financial unit during the second quarter.
The company as a whole is reporting $588 million in net income for the quarter on $7.9 billion in revenue, up from $344 million in net income on $7.5 billion in revenue for the second quarter of 2002.
But Allstate Financial is reporting $98 million in net income for the latest quarter on $3.3 billion in revenue, down from $106 million in net income on $3.3 billion in revenue.
Allstate Financial experienced “continued strong fixed annuity sales more than offset by lower sales of institutional products and variable annuities,” Allstate says in a discussion of the results.
Consumers’ fear of investment risk helped push sales revenue from fixed annuities up 20%, to $1.4 billion. Sales revenue for variable annuities fell 7.5%, to $545 million.
But Allstate Financial may be seeing some of the revival of interest in variable products that has been showing up in the bank annuity sales reports compiled by Kenneth Kehrer Associates, Princeton, N.J.
Although variable annuity sales were lower in the second quarter than in the comparable quarter of 2002, the drop was smaller in the second quarter than in the first quarter. During the first quarter, Allstate Financial VA sales were 22% lower than they were during the first quarter of 2002, Allstate says.