AIG Says Low Rates Likely to Hurt Fixed Annuity Sales: Earnings

At Washington National, spending on commission expense and distribution fees rose to $21 million, from $19 million.

Here’s what happened to new annualized premiums for some products other than LTCI policies:

Bankers Life

• Medicare supplement: $16.1 million (up from $15.8 million)
• Life: Held steady at about $30 million
• Annuity: $324 million (down from $354 million)

Washington National

• Supplemental health and other health: $18 million (up from $17 million)
• Life: $2.4 million (up from $1.7 million)

During the CNO earnings call, Paul McDonough, the chief financial officer, told analysts that the company’s LTCI business is performing as expected. “New business gains outpaced earned rate reductions,” McDonough said. “There were no material long-term care assumption changes, as experience continues to align very well with expectations.”

Gary Bhojwani, the chief executive officer, said that the number of producing agents is up 6%, and more first-year agents are staying on through the second and third year.

More of the agents are licensed to sell securities, and those agents’ ability to sell income planning products helps lead to deeper, more productive client relationships, Bhojwani said.

Like many of the other life insurer executives who have participated in earnings calls in the past few weeks, Bhojwani emphasized the need for discipline in connection with annuity sales in the face of lower interest rates, and lower yields on the investments that support life and annuity products.

“As a result of our pricing discipline, we will accept lower sales when market conditions warrant, to ensure that we’re putting business on our books that meets our return thresholds,” Bhojwani said.

Primerica Inc. (NYSE:PRI)

Primerica is reporting $94 million in net income for the fourth quarter of 2019 on $532 million in revenue, up from $87 million in net income on $487 million in revenue for the fourth quarter of 2018.

The Duluth, Georgia-based company’s own commission and fee revenue increased to $188 million, from $172 million.

The company’s sales commission expense spending increased to $6.6 million, from $5.6 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: 130,522 (down from 130,736)
• Recruits: 60,466 (up/down from 61,990)
• Average number of policies sold per rep per month: Held steady at 0.18.

Here’s what happened to sales of certain types of products between the year-earlier quarter and the latest quarter:

• Term life: 71,469 policies (down from 72,122 policies)
• U.S. Retail Mutual funds: $832 million (down from $768 million)
• Annuities: $660 million (up from $565 million)

During Primerica’s earnings call,  Glenn Williams, the chief executive officer, said the company has worked to increase sales by adding an insurance wholesaling team, to help agents with product and sales training.

CVS Health Corp. (NYSE:CVS)

CVS is reporting $1.7 billion in net income for the fourth quarter of 2019 on $67 billion in revenue, up from a $421 million net loss on $54 billion in revenue for the year-earlier quarter.

The Woonsocket, Rhode Island-based drug store company’s health care benefits unit, which now includes Aetna and some other operations, is reporting $386 million in operating income for the latest quarter on $17 billion in revenue, compared with $432 million in operating income on $6.2 billion in revenue for the year-earlier quarter.

CVS ended the quarter providing or administering coverage for 23 million people, up from 22 million a year earlier.

During the CVS earnings call, Karen Sue Lynch, president of the Aetna business unit, said the number of enrollees seeing doctors for flu was a little above normal, but that the level of severity has been lower, and that the company believes it has covered the flu claim costs adequately in reserves.

CVS executives talked repeatedly about efforts to set up  “HealthHUB” health care areas in about 650 stores by the end of the year, and in about 1,500 stores overall.

Between MinuteClinic walk-in clinics and the new HealthHUB areas, many CVS stores should be about to treat about 80% of what a primary care physician can treat, according to Larry Merlo, the CVS chief executive officer.

But many enrollees want a strong relationship with a traditional primary care physician, Merlo said.

CVS sees the HealthHUB centers as being more providers of health care “navigator” services, or care coordination services, than as replacements for traditional primary care, Merlo said.

Merlo said CVS is making room for the HealthHUB centers by reducing the amount of general merchandise the drug stores sell, and that the health beauty products still in the front of the stores tend to have higher profit margins than the general merchandise did.

— Read Prudential Aims to Cut Stock-Related Annuity Risk: Earnings, on ThinkAdvisor.

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