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.

(Related: Great American Parent Explains Annuity Unit to Wall Street)

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.

Ben Franklin on a fifty (Image: Thinkstock)

(Image: Thinkstock)

1. Self-discipline

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.”

2. Persistence

Fuller said that Lincoln has tried to maximize profitability by maintaining a consistent market presence.

3. Realism

Fuller said Lincoln tried to start out with reasonable assumptions. So far, the assumptions about matters such as lapses, utilization and mortality have been in line with actual experience, Fuller said.

4. Indexing

Fuller said Lincoln has been working to expand indexed fixed annuity market share through “select strategic partners,” and is also adding an indexed variable annuity contract.

5. A wide circle of friends

Fuller said Lincoln has added fixed indexed annuities aimed specifically at banks and broker-dealers, and has aimed at fee-based advisors by offering a full suite of fee-based variable annuities. 

—Read 5 Reasons Variable Annuities Look Prettier on ThinkAdvisor.

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