Top executives at some big U.S. annuity issuers say they’re happy with how the annuity units have been doing but have noticed that interest rates have fallen.
The executives have been talking about the return of falling rates over the past week, in conference calls with securities analysts.
Typical “publicly traded” insurers — the kinds with shares of stock that trade on the New York Stock Exchange or Nasdaq — hold analyst calls every three months, to go over their earnings and discuss what the future may hold.
New York Life Insurance Company, Pacific Life, Thrivent and many other big annuity issuers are missing from the list of insurers that hold earnings calls. They are not public companies, and they do not have to court securities analysts.
But the views of the executives at the companies that do hold the calls may give outsiders a glimpse of what executives throughout the industry are thinking. Agents, brokers and others can listen to the calls by going to the events area in a publicly traded insurer’s investor relations website section.
Here are five things executives from annuity issuers have been saying at the most recent wave of calls.
1. “Discipline” is hot.
At least five top executives — Daniel Pitcher, the chief executive officer of FBL Financial Group Inc.; Dennis Glass, the CEO of Lincoln Financial; Craig Lindner, the co-CEO of American Financial Group Inc.; and two executives from Prudential Financial Inc. — used the word “discipline” or “discplined” to refer to how they’re approaching their annuity operations now.
“We continue to remain focused on disciplined pricing to help us achieve our targeted returns,” Lindner said.
At FBL, Pitcher used the word “discipline” several times.
“We continue to maintain our financial discipline as we determine appropriate crediting rates in this low interest rate environment,” Pitcher said.
“We’re being very disciplined in our pricing of product and in our return on new sales,” said Andy Sullivan, the head of Prudential’s U.S. business.
2. Letting cash flow out of annuities is fine.
Eric Steigerwalt, the Brighthouse CEO, told analysts his company posted $1.2 billion in total annuity net outflows in the fourth quarter of 2019. That was down from the outflow total for the fourth quarter of 2018, but up from the total for the third quarter of 2019.
“As we’ve said previously, we expect to see a continued shift in our business mix profile over time, as we gain more cash-flow generating and less capital-intensive new business, coupled with the runoff of less profitable business,” Steigerwalt said.