The first life and annuity issuers to report their fourth-quarter earnings say the recent stock market volatility storm knocked some twigs down but left roofs intact.
Those issuers are American Financial Group Inc., which is the parent of Great American Financial Group; Ameriprise Financial Inc.; and Principal Financial Group Inc.
The companies faced a 14% drop in the S&P 500 stock index in the latest quarter.
Here’s a look at some of what those companies are reporting, and the companies’ executives told securities analysts in conference calls held to go over the latest results.
American Financial is reporting a $35 million net loss for the fourth quarter of 2018 on $1.7 billion in revenue, compared with $166 million in net income on $1.8 billion in revenue for the fourth quarter of 2017.
The Great American annuity operation is reporting $20 million in earnings before income taxes on $1.5 billion in statutory premiums, compared with $97 million in earnings before income taxes on $909 million in statutory premiums for the comparable quarter in 2017.
The net interest spread, or gap between what the annuities paid the holders and what Great American earned on its own investments, narrowed to 2.58%, from 2.62%.
Here’s what happened to statutory annuity premiums, broken down by major distribution channel:
- Retail Agents: Increased 65%, to $415 million.
- Financial Institutions: Increased 40%, to $597 million.
- Broker-Dealers: Increased 94%, to $339 million.
Carl Lindner, the company’s co-president, told analysts during the company’s call that the company has been “very disciplined in maintaining pricing that results in what we consider to be appropriate profitability, and appropriate returns.”
The company was quicker than some others to increase annuity prices, Lindner said.
Lindner said he believes that some banks have been letting “lower-rated companies that price very aggressively sell through their channel.”
“I was hoping that would not happen,” Lindner said.
Ameriprise is reporting $539 million in net income for the latest quarter on $3.2 billion in revenue, compared with $177 million in net income on $3.2 billion in revenue for the year-earlier quarter.
The company’s annuities unit is reporting $51 million in pretax adjusted operating earnings on $613 million in adjusted operating total net revenues, compared with $148 million in pretax operating earnings on $638 million in revenue for the year-earlier quarter.
The flow of assets out of the company’s annuities fell to $1 billion, from $1.1 billion.
At the life and health unit, pretax adjusted operating earnings fell to $64 million on $850 million in allocated capital, from $73 million on $726 million in allocated capital.