NU Online News Service, Feb. 19, 2004, 6:54 p.m. EST – MetLife Inc., New York, has been aggressive about courting annuity buyers.[@@]

J. Jeffrey Hopson, a life and health stock analyst at A.G. Edwards & Sons Inc., St. Louis, reaches that conclusion in an A.G. Edwards research report on financial services companies’ latest round of earnings.

MetLife is such a big, diverse company that its results almost always reflect strong performance in some areas and weaker results in others, Hopson writes.

“On the positive side, stable investment spreads (and bullish comments regarding the future of such), improved credit trends, annuity growth and an improved capital position were positive themes that we appreciated,” Hopson writes.

But Hopson adds that life insurance distribution was inconsistent.

“Further, we remain concerned that the annuity sales success is partly due to enhanced features that do not make sense from a longer term perspective,” Hopson writes.

In another section of the report, Hopson praises efforts by AmerUs Group Inc., Des Moines, Iowa, to get a higher percentage of sales from high-margin equity-indexed annuities, but he suggests that the company might have a tough time overcoming tighter interest rate spreads on older annuity products.

“While the increase in interest rates in mid-2003 had given the company some breathing room on spreads, the recent drop may again present a challenge,” Hopson writes. “We note that 71% of the annuity reserves have crediting rates that are currently equal to the minimum crediting rate. Annuity spreads appeared to be up by roughly 1 basis point in the fourth quarter versus the third quarter.”