Life insurers generate so much cash that they are usually major sources of capital for other companies.
But investors “on Wall Street” do provide some of the capital life insurers use to run their operations and make large acquisitions.
Investors’ view of a publicly traded insurer also affects the insurer’s stock price. When an insurer’s stock price is higher, the insurer can use its own stock to pay for bigger and better deals.
Having a good image on Wall Street may also help an insurer get more attention from the financial media. The insurer can then use “earned media,” or publicity, to amplify the value of the “paid media,” or advertising campaigns, it organizes to support agents’ and brokers’ sales efforts.
Executives from Lincoln Financial recently courted Wall Street by holding a conference for securities analysts, investors and bankers. One of the topics the executives addressed was the company’s annuity business.
Here’s a look at five characteristics of an annuity business that can make it appealing to investors, drawn from comments that Will Fuller, president of Lincoln’s annuity solutions unit, made at the conference. Lincoln filed a copy of the presentation slidedeck with the U.S. Securities and Exchange Commission.
Agents, and clients, may like annuity contracts that offer rich living benefits guarantees at a low price, but Fuller noted that Lincoln’s annuity unit is attractive partly because it avoided getting into any “living benefit arms race.”