4. Flu: An increase in the influenza death rate could hurt the issuers' life insurance operations but, in some cases, help the annuity operations, by reducing spending on annuity benefits payments.
2. Timing: The analysts speculate that some issuers may have recorded ugly charges early, in the fourth quarter of 2017, and made way for the earnings for prettier Q1 2018 earnings.
1. International affairs: The analysts predict that currency fluctuations will affect earnings at many big issuers, and that Athene could benefit from being based in Bermuda, rather than in the United States.
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.
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.
— Read Brighthouse Increases Annuity Sales 26% on ThinkAdvisor.