The trickle of first-quarter earnings releases has started to slow.
Here’s a look at some of the announcements that have flowed out in the past week.
Life and Annuity
American International Group Inc. (Stock symbol: AIG)
AIG is reporting $937 million in net income for the first quarter on $12 billion in revenue, compared with $949 million in net income on $12 billion in revenue for the first quarter of 2018.
The company’s life and retirement unit is reporting $924 million in adjusted pretax income on $4.2 billion in revenue, up from $892 million in adjusted pretax income on $3.5 billion in revenue.
Here’s what the company said happened to net flows of cash for several key individual retirement products, in the United States, between the first quarter of 2018 and the latest quarter:
- Indexed annuities: +$1.2 billion (up from +$615 million)
- Variable annuities: -$576 million (compared with -$477 million)
- Fixed annuities: +$211 million (compared with -$781 million)
Kevin Hogan, AIG’s chief executive officer for life and retirement operations, said the company is letting guaranteed universal life sales fall because of concerns about the current interest environment.
At the individual retirement unit, annuities are selling well right now, he said.
Retail mutual funds are now the individual retirement products that seem to be facing headwinds, he said.
Athene Holding Ltd. (Stock symbol: ATH)
Athene — a company that buys other life and annuity companies, and blocks of life and annuity business — is reporting $708 million in net income for the first quarter on $5 billion in revenue, compared with $277 million in net income on $1 billion in revenue for the first quarter of 2018.
Retail sales increased to $1.8 billion, from $1.3 billion.
“The increase in our retail channel was driven by significant growth in our bank channel, including the addition of new bank partners, the rising rate environment and new product introductions,” the company says in the quarterly report it filed with the U.S. Securities and Exchange Commission. “We aim to grow our retail channel by deepening our relationships with our approximately 55 independent marketing organizations (IMO); more than 40,000 independent agents; and our growing network of 10 small and mid-sized banks and 79 regional broker-dealers.”
Athene executives talked about a new “inorganic” expansion effort — Athene Co-Invest Reinsurance Affiliate (ACRA) — during a conference call the company held to go over the latest earnings with securities analysts.
ACRA will use cash from outside investors to make big deals, according to Jim Belardi, Athene’s chief executive officer.
Apollo Global Management, another financial services company, has already raised $1 billion in investor money for ACRA and hopes to raise another $3 billion by Sept. 30, Belardi said.
The ACRA unit will handle big pension risk transfer deals, reinsurance and funding agreements as well as acquisitions, Belardi said.
Athene executives said ACRA will give the company about $7 billion in deal capacity.
Bill Wheeler, Athene’s president, said ACRA will help Athene go after news set of deal targets.
“The competition in the M&A side of this business is for the very small vanilla blocks that don’t have a lot of complexity,” Wheeler said. “There’s a lot of hunger for those blocks. The pricing just doesn’t seem to make very much sense to us. When you move away from that, a lot of our competition falls away.”
AXA Equitable Holdings Inc. (Stock symbol: EQH)
AXA Equitable is reporting a $709 million net loss for the first quarter on $1.7 billion in revenue, compared with $214 million in net income on $2.9 billion in revenue for the first quarter of 2018.
The net loss, and the drop in revenue, are due mainly to a large loss on the net value of derivatives arrangements.
Comprehensive income, which treats derivatives and some other items in a different way, increased to $108 million, from a net loss of $624 million in the year-earlier period.
Operating earnings increased to $509 million, from $483 million.
Spending on commissions and other distribution-related payments fell to $281 million, from $291 million.
Here’s what happened to first-year premiums and deposits for some key types of individual retirement products between the first quarter of 2018 and the first quarter of 2019:
- SCS variable annuities: $1.1 billion (up from $775 million)
- Retirement Cornerstone variable annuities: $583 million (down from $627 million)
- Investment Edge variable annuities: $110 million (down from $132 million)
Mark Pearson, AXA Equitable’s chief executive officer, said during a conference call the company held to go over first quarter earnings with securities analysts that the net loss was due to “non-economic items related to VA [variable annuity] product features.”
“Overall, this result was in line with expectations and our previously communicated guidance,” Pearson said.
Pearson estimated that about 60% of individual retirement product sales came from outside distribution channels and about 40% from AXA Equitable’s own advisors.
Variable annuities without built-in living benefits guarantees accounted for about 70% of sales, according to Anders Malmstrom, the company’s chief financial officer.
FGL Holdings (Stock symbol: FG)
FGL is reporting $171 million in net income for the first quarter on $600 million in revenue, up from $104 million in net income on $138 million in revenue for the first quarter of 2018.
FGL is the parent of Fidelity & Guaranty Life Insurance Company.
(Related: Annuity Issuer Makes Changes)
Here’s what happened to net deposits for some types of annuities the company sells between the first quarter of 2018 and the latest quarter:
- Indexed annuities: $639 million (up from $404 million)
- Single-year guaranteed: $5 million (up from $1 million)
- Multi-year guaranteed: $278 million (up from $143 million)
During a conference call FGL held with securities analysts to go over the latest results, Chris Blunt — FGL’s president — said the company held its net spread margins for indexed annuities, or the difference between the rates it’s paying the annuity holders and the rates its earnings on its own investments, steady. That demonstrates FGL’s commitment to maintaining its pricing discipline, he said.
Blunt also talked about operations that could grow well in the near future. He said the company will be making a major push to sell annuities through broker-dealers starting in early 2020, and that the company also hopes to increase deal flow through its offshore F&G Re reinsurance arm.
“Our pipeline of potential new clients continues to build,” Blunt said.
Primerica Inc. (Stock symbol: PRI)
Primerica is reporting $79 million in net income for the first quarter on $495 million in revenue, up from $66 million in net income on $460 million in revenue for the first quarter of 2018.
The company’s own commission and fee revenue increased to $167.3 million, from $166.8 million.
The company’s sales commission expense spending increased to $84 million, from $82 million.
Here are some of the distribution force performance numbers Primerica released, compared with how those indicators looked in the year-earlier quarter:
- Life-licensed sales force: 129,821 (up from 127,182)
- Recruits: 63,223 (down from 76,230)
- Average number of policies sold per rep per month: 0.16 (down from 0.19)
Here’s what happened to sales of certain types of products between the year-earlier quarter and the latest quarter:
- Term life: 64,242 policies (down from 70,821 policies)
- Mutual funds: $954 million (down from $1.1 billion)
- Annuities: $547 million (up from $444 million)
Glenn Williams, Primerica’s chief executive officer, said during a conference call the company held to go over its latest results with securities analysts that demand for the company’s products appears to be strong, and that he believes the company’s sales force is catching its breath after an extended period of high productivity.
“We consider this part of the natural ebb and flow of our business,” Williams said.
The company will be trying to improve performance by using short-term incentives focus the sales force on the most immediate opportunities, and it will also try to run a more disciplined process for getting new recruits licensed as agents, Williams said.
HC2 Holdings Inc. (Stock symbol: HCHC)
HC2 — a conglomerate that has been buying long-term care insurance and annuity issuers — is reporting a $6.3 million net loss for the first quarter on $491 million in revenue, compared with a $39 million net loss on $454 million in revenue for the first quarter of 2018.
The company’s insurance unit is reporting $34 million in operating income on $89 million in revenue and $5.4 billion in assets, up from $3 million in operating income on $40 million in revenue and $5.2 billion in assets for the year-earlier quarter.
Independence Holding Company (Stock symbol: IHC)
IHC is reporting $8.7 million in net income for the first quarter on $94 million in revenue, up from $7 million in net income on $88 million in revenue for the first quarter of 2018.
Roy T.K. Thung, IHC’s chief executive officer, said in a statement that the company’s IHC Special Benefits division is already a substantial insurance agency and is now starting to sell Medicare supplement insurance policies, as well as more supplemental health insurance policies.
Triple-S Management Corp. (Stock symbol: GTS)
Triple-S — the Blue Cross and Blue Shield carrier for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Costa Rica and Anguilla — is reporting $35 million in net income for the first quarter on $810 million in revenue, up from $3.9 million in net income on $770 million in revenue for the first quarter of 2018.
The company ended the quarter providing or administering medical coverage for about 921,000 people, down from about 974,000 a year earlier.
Here’s what happened to enrollment for some major types of coverage between the first quarter of 2018 and the latest quarter:
- Medicare plans: 128,000 (up from 112,000)
- Medicaid plans: 356,000 (down from 394,000)
- Commercial plans: 437,000 (down from 468,000)
To find earnings documents for specific companies, put one of the “ticker symbols” given here, such as RGA for Reinsurance Group of America, in the Fast Search search box located here, on the SEC website.
— Read Medicare Posts $1.6 Billion Loss, on ThinkAdvisor.