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5 Top Q1 Annuity Earnings Wild Cards

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These days, Ameriprise Financial Inc. is usually the first major annuity issuer to post its quarterly earnings.

When Ameriprise posts its earnings for the first quarter, on April 23, that will give agents, brokers and other insurers new clues about how the U.S. annuity market is really doing.

(Related: Ameriprise Spends 7% More on Annuity Distribution)

Reinsurance Group of America Inc. will give some more clues, when it posts its earnings, on  April 26, and then issuer releases will pour out.

The issuer earnings releases may have no direct, immediate effect on the agents who sell annuities, but the earnings releases have a huge indirect effect: They help determine what publicly traded insurers want to sell, and, in many cases, what the insurers can sell.

The owners of publicly traded life insurers are the stockholders. If the stockholders think an insurer can make more money per $1,000 of capital by selling pet insurance, or hammers, than by selling annuities, the insurer’s product menu may soon change. Even if the insurer keeps the less profitable annuities on the shelves, it may adjust its commission schedule to favor sales of higher-margin products.

One of the major, long-term drivers of annuity results is demographics. Affluent baby boomers are starting to retire, and they are looking for products that can help them manage their post-retirement income flow.

Another major long-term driver is interest rates. Years of low rates have pounded annuity issuers’ earnings, but rates have started to come up in recent months, and that could help issuers’ results.

A team of analysts at Morgan Stanley recently published a look at other factors that might cause some issuers’ first-quarter earnings to be higher, or lower, than expected.

We’ve posted a look at five of those factors in the slideshow “gallery” above. Click on the arrows on the sides of the gallery box to see what’s keeping the Morgan Stanley analysts’ spreadsheet software busy now.

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