Low interest rates squeezed earnings at Jefferson-Pilot Corp. during the second quarter.[@@]
Jefferson-Pilot, Greensboro, N.C., is reporting $137 million in net income for the latest quarter on $1.06 billion in revenue, compared with $142 million in net income on $1.05 billion in revenue for the second quarter of 2004.
Although annualized premiums from life insurance sales increased to $64 million, from $54 million, and annualized group life, group disability and group dental sales increased to $53 million, from $48 million, fixed annuity sales edged down to $290 million, from $291 million.
Jefferson-Pilot brought in $300 million in additional sales by entering the market for funding agreements. Funding agreements are fixed-rate notes sold to institutional buyers.
Jefferson-Pilot is providing 2 different pictures of investment spreads, or the gap between the rates it pays purchasers of fixed-rate contracts and the rates it earns on its own investments.
Including the effect of Financial Accounting Standard 133, a complicated new accounting standard, the company’s average spread for fixed annuities and funding agreements narrowed to 1.53%, from 1.71%.
Excluding the effects of FAS 133, the average spread widened to 1.96%, from 1.64%, Jefferson-Pilot says.