Prudential Posts Big Increase in Annuity Sales

Prudential Financial Inc. says its U.S. individual annuity sales climbed to $2.2 billion in the third quarter, up from $1.3 billion in the third quarter of 2017.

Mark Grier, the vice chairman of the Newark, New Jersey-based company, said Thursday that the increase was due partly to “thoughtful pricing strategies.”

(Related: How 6 Annuity Issuers Are Doing Now)

Prudential’s emphasis on financial wellness has also helped increase individual annuity sales, Grier told securities analysts, during a conference call.

The individual annuity business “has a role in our wellness initiative,” Grier said.

The opportunity to put information about retirement income products on the company’s wellness platform has been important for Prudential, Grier said.

In spite of the increase in U.S. individual annuity sales, operating earnings for the U.S. individual annuities unit fell. Grier said the decrease was due partly to an increase in variable selling costs.

It was not immediately clear from Grier’s remarks and Prudential’s earnings release whether the increase in variable selling cost reflected changes in compensation for agents, wirehouses or other parties involved in annuity sales and distribution efforts.

Prudential’s Earnings

Prudential held the conference call to go over its third-quarter earnings.

Prudential as a whole is reporting $1.7 billion in net income for the latest quarter on $14 billion in revenue, compared with $2.2 billion in net income on $13 billion in revenue for the third quarter of 2017.

After-tax adjusted operating income held steady at about $1.3 billion.

The company’s net income includes the effects of a decrease in realized investment gains, and related charges and adjustments, to $177 million, from $1.2 billion.

The U.S. individual solutions division, which handles the U.S. life and annuity operations, is reporting $624 million in adjusted operating income before income taxes for the latest quarter on $2.7 billion in revenue, compared with $727 million in adjusted operating income before income taxes on $2.7 billion in revenue for the year-earlier quarter.

At the U.S. individual annuity unit, adjusted operating income before income taxes fell to $454 million, from $577 million.

At the U.S. individual life unit, adjusted operating income before income taxes increased to $170 million, from $150 million.

Prudential’s U.S. Individual Life and Annuity Sales

ANNUITIES

• Variable annuities: $2.1 billion (up from $1.3 billion).
• Fixed annuities: $128 million (up from $11 million).
• Individual annuity sales by insurance agents: $640 million (up from $418 million).
• Individual annuity sales by wirehouses: $433 million (up from $202 million).
• Individual annuity sales by independent financial planners: $999 million (up from $597 million).
• Individual annuity sales through banks: $169 million (up from $112 million).

LIFE

• Term life: $55 million (down from $57 million).
• Guaranteed universal life: $23 million (down from $31 million).
• Other universal life: $44 million (up from $28 million).
• Variable life: $41 million (up from $26 million).
• Individual life sales through Prudential advisors: $35 million (up from $29 million).
• Individual life sales through third-party distribution: $128 million (up from $113 million).

Resources

Prudential has posted a variety of resources related to its earnings here.

Links to audio recordings of the company’s past conference calls are available here.

— Read Ameriprise Increases Variable Annuity Sales 3%, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.