A money telescope for Q4 2019 (Credit: Thinkstock)

Prudential Financial Inc. did well in the fourth quarter, but it’s trying to harden itself against current and future financial storms.

Executives at the Newark, New Jersey-based company said the company’s is already making adjustments to counter the effects of low interest rates.

(Related: Principal Posts Strong Life Sales: Earnings)

The company is also working to cut costs, and to reduce the exposure of annuity operations to changes in stock prices.

At the U.S. individual annuity operation, “gross sales of $2.1 billion in the current quarter reflect our continued diversification strategy, with 65% of sales coming from less equity-market-sensitive products,” Prudential says.

Executives talked about the company’s financial risk-management efforts Tuesday, when they announced earnings for the fourth quarter of 2019.

Resources

The U.S. Securities and Exchange Commission’s Fast Search company filing search tool is available here. Enter the company’s stock symbol (such as, PRU, for Prudential) in the search form to see the official earnings filings.

Prudential as a whole is reporting $1.1 billion in net income for the fourth quarter of 2019 on $17.5 billion in revenue, compared with $849 million in net income on $17.8 billion in revenue for the fourth quarter of 2018.

The U.S. individual solutions division is reporting $508 million in adjusted operating income before income taxes on $2.8 billion in revenue, up from $419 million in adjusted operating income before income taxes on $2.7 billion in revenue.

U.S. individual premiums fell to $268 million, from $306 million, but net investment income increased to $806 million, from $700 million.

Individual Life

Prudential’s U.S. individual life business is reporting $58 million in adjusted operating income before income taxes on $1.6 billion in revenue, compared with a $26 million adjusted operating loss before income taxes on $1.5 billion in revenue for the year-earlier quarter.

Here’s what happened to sales of key life products between the fourth quarter of 2018 and the fourth quarter of 2019:

  • Term Life: $47 million (down from $55 million)
  • Guaranteed Universal Life: $26 million (down from $29 million)
  • Other Universal Life: $42 million (down from $51 million)
  • Variable Life: $94 million (up from $58 million)

Sales through Prudential’s own advisors increased to $40 million, from $37 million.

Sales through outside distributors increased to $169 million, from $156 million.

Individual Annuities

Prudential’s U.S. individual annuities business is reporting $450 million in adjusted operating income before income taxes on $1.2 billion in revenue, compared with $445 million in adjusted operating income before income taxes on $1.2 billion in revenue.

Variable annuity sales fell to $1.9 billion, from $2 billion.

Sales of variable annuities other than the Highest Daily Suite products increased to $1.1 billion, from $1 billion.

Fixed annuity sales increased to $223 million, from $189 million.

Here’s what happened to sales through specific distribution channels between the fourth quarter of 2018 and the fourth quarter of 2019:

  • Insurance Agents: $676 million (down from $684 million)
  • Wirehouses: $310 million (down from $430 million)
  • Independent Marketing Organizations: $30 million (up from none)
  • Independent Financial Planners: $904 million (down from $974 million)
  • Banks: $161 million ( up from $150 million)

Aflac Inc. (NYSE:AFL)

Aflac is reporting $782 million in net income for the fourth quarter of 2019 on $5.6 billion in revenue, up from $525 million in net income on $5.1 billion in revenue for the fourth quarter of 2018.

Aflac has large operations in Japan.

The Columbus, Georgia-based company’s Aflac U.S. unit, is reporting $275 million in pretax adjusted operating earnings on $1.6 billion in revenue, compared with $274 million in pretax adjusted operating earnings on $1.6 billion in revenue for the year-earlier quarter.

New annualized premiums from sales of the company’s flagship accident insurance product fell to $148 million, from $154 million. Sales of hospital indemnity insurance increased to $97 million, from $91 million.

The average number of weekly producer equivalents fell to 8,610, from 9,082, but the average amount of production per producer increased to $61,996, from $59,146.

Centene Corp. (NYSE:CNC)

Centene is reporting $202 million in net income for the fourth quarter of 2019 on $19 billion in revenue, compared with $241 million in net income on $16 billion in revenue for the fourth quarter of 2018.

The St. Louis-based managed care company ended the year providing or administering health coverage for 15 million people, up from 14 million people a year earlier.

Here’s what happened to three types of enrollment:

  • All Commercial: 2.3 million (up from 2 million)
  • Affordable Care Act Public Exchange (Marketplace): 1.8 million (up from 1.5 million)
  • Medicare: 404,500 (down from 416,900)

Centene completed the $20 billion acquisition of Wellcare Health Plans Inc, a big player in the Medicare plan market, Jan. 23.

The company has ACA public exchange plans in 10 states: Arizona, Florida, Georgia, Kansas, North Carolina, Ohio, South Carolina, Tennessee, Texas and Washington state. The company says the public exchange plans are performing with operating profit margins of 5% to 10%, and within the expected range.

Flu-related costs have been “slightly higher than projected,” Centene says.

Genworth Financial Inc. (NYSE:GNW)

Genworth is reporting $24 million in net income for the fourth quarter of 2019 on $2 billion in revenue, compared with a $327 million net loss on $2 billion in revenue for the fourth quarter of 2018.

Genworth was once a major life insurance and annuity issuer. It still sells some long-term care insurance (LTCI), and it continues to be a major provider of private mortgage insurance.

The Richmond, Virginia-based company’s U.S. life unit is reporting a $115 million adjusted operating loss on $1.6 billion in revenue, compared with a $425 million adjusted operating loss on $1.6 billion in revenue for the year-earlier quarter.

The company’s LTCI unit is reporting $19 million in adjusted operating income on $1.1 billion in revenue, compared with a $314 adjusted operating loss on $1.1 billion in revenue for the year-earlier quarter.

The LTCI results for the year-earlier quarter included $258 million in charges related to LTCI assumption updates.

Genworth says mortality was down for holders of universal life insurance and term life insurance, but up for holders of single-premium immediate annuities.

Globe Life Inc. (NYSE:GL)

Globe Life is reporting $187 million in net income for the fourth quarter of 2019 on $1.1 billion in revenue, up from$165 million in net income on $1 billion in revenue for the fourth quarter of 2018.

An expense item that includes commissions, premium taxes and non-deferred policy acquisition costs increased to $77 million, from $70 million.

Globe Life writes life insurance, some annuities, and health insurance products other than major medical insurance. The McKinney, Texas-based company also owns three career agency businesses.

Here’s what happened to the quarterly average producing agent count at the three Globe Life career agency units between the fourth quarter of 2018 and the latest quarter:

  • American Income: 7,631 (up 10%)
  • Liberty National: 2,534 (up 17%)
  • National Family Heritage: 1,228 (up 9%)

The company’s life net sales increased 7%, to $107 million.

Health net sales increased 13%, to $64 million.

Unum Group (NYSE:UNM)

Unum is reporting $296 million in net income for the fourth quarter of 2019 on $3 billion in revenue, up from $249 million in net income on $2.9 billion in revenue for the fourth quarter of 2018.

Unum US, the Chattanooga, Tennessee-based company’s traditional group insurance unit, is reporting $263 million in adjusted operating income for the latest quarter on $1.7 billion in revenue, up from $249 million in adjusted operating income on $1.6 billion in revenue.

Commission spending held steady at $153 million.

Here’s what happened to premium revenue for some key products:

  • Group Long-Term Disability: $459 million (up from $443 million)
  • Group Short-Term Disability: $198 million (up from $179 million)
  • Group Life: $413 million (up from $394 million)
  • Accidental Death and Dismemberment: $42 million (up from $39 million)

Colonial Life, the worksite marketing unit, is reporting $88 million in adjusted operating income on $463 million in adjusted operating revenue, up from $85 million in adjusted operating income on $447 million in adjusted operating revenue.

Commission spending fell to $84 million, from $91 million.

Here’s what happened to Colonial Life premium revenue for several key products:

  • Accident, Sickness and Disability: $246 million (up from $237 million)
  • Life: $89 million (up from $84 million)
  • Cancer and Critical Illness: $90 million (up from $88 million)

— Read UnitedHealth Execs Happy With 2020 Medicare Advantage Numberson ThinkAdvisor.

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