New York Life's dividends to policyholders to rise 8% in 2013

“This is our best year ever in terms of sales of income annuity products,” says Pfaff. “We should have well over $1 billion in sales through 2012. In respect to variable annuities, we expect to achieve an 8% to 9% growth in sales for all of 2012. And that’s on top of the 22% sales increase we recorded last year.”

Pfaff adds that New York Life’s “case rate” (or the number of sales) also grew 6.5% in the third quarter. For all of 2012, the case rate is expected to be up by 7-8% compared to 2011.  

Sales of New York Life’s flagship product, whole life insurance, also are up 20% through the third quarter, says Pfaff.

Mutual fund sales in the third quarter increased 10% compared with the third quarter of 2011. The gain, New York Life reports, reflects the “consistent investment performance from the company’s investment boutiques in both income-oriented and capital appreciation funds.”

While touting New York’s robust third quarter results, Pfaff says that several macroeconomic factors remain concerns for the company moving into 2013. Among them: Congressional action to reign in the deficit by, among other possible measures, eliminating or watering down the tax-favored treatment of life insurance; the slow-growth economy; and continuing low interest rates. Moody’s Strauss believes, however, that if New York Life and other mutual life insurance companies can continue to maintain high dividend payments to policyholders, then the company should be able to insulate itself in some measure from low interest rates, which tend to depress insurers’ earnings on investments and the credit ratings they can offer policyholders on their products.

“Mutual insurers will be impacted less than other companies [by low interest rates] next year because dividends let them absorb some of the negative effect,” he says. “Though not immune to the interest rate environment, the mutual companies are more protected against low interest rates than publicly held insurers.”

Strauss notes also that, because mutual insurers aren’t beholden to stockholders they’re better able than publicly held companies to plan for the long-term and to resist steps that might only yield-short term gains.