Insurers have been painting a mixed picture of fourth-quarter 2004 conditions this week.[@@]
Some carriers have been reporting good results, but others, including some with solid profits, are expressing concerns about competitors’ prices on products such as fixed annuities.
- American International Group Inc., New York, is reporting $3 billion in net income for the latest quarter on $26 billion in revenue, up from $2.7 billion in net income on $22 billion in revenue for the fourth quarter of 2003.
AIG’s worldwide life and retirement operation increased its operating income for the quarter to $2.4 billion, from $1.9 billion, but domestic annuity results were soft. Although individual annuity profits were up, the domestic annuities attracted only $1.3 billion more cash than they lost, down from a positive net flow of $2.7 billion for the fourth quarter of 2003. Net flow into individual variable annuities fell to $152 million, from $322 million.
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“Rising short-term interest rates in the latter part of 2004 and aggressive competitor pricing contributed to the difficult sales and net flow comparisons, but we have developed strategies to deal with the changing environment,” AIG says in a comment on the domestic annuity operations. “The company will remain disciplined in pricing and return requirements.”
- MetLife Inc., New York, is reporting $511 million in net income for the latest quarter on $10 billion in revenue, compared with $701 million in net income on $9.5 billion in revenue for the fourth quarter of 2003.
Net income fell in part because of the loss of $228 million in profits from State Street Research, Boston, and other operations that MetLife sold during the year.
First-year premiums rose to $497 million for fixed annuities, from $275 million, but fell to $2.1 billion, from $2.6 billion, for variable annuities.
- Prudential Financial Inc., Newark, N.J., is reporting $578 million in net income for the latest quarter on $7.4 billion in revenue, up from $575 million in net income on $7.1 billion in revenue for the fourth quarter of 2003.
Net results include $158 million in losses on investments that Prudential sold, wrote off or wrote down during the quarter.
The company’s annuity sales fell to $1.4 billion, from $1.6 billion.