Athene Has Big Fish on the Line: Earnings

Executives at Athene Holding Ltd. say that company has plenty of attractive merger and acquisition candidates in its deal pipeline.

Bill Wheeler, Athene’s president, told securities analysts recently that Athene is in a great position to do large transactions.

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

“We probably don’t have zero competition for large transactions, but it’s close,” Wheeler said. “So, I would say, given that I think it’s just as hard to do a midsize deal as a big deal, I think there’s a good chance that we may very well do a big deal. The opportunity is clearly there for large transactions.”

Jim Belardi, Athene’s chairman, said the company continues to take a disciplined approach to evaluating the various opportunities that are out there.

Athene executives discussed the deal climate during a conference call Athene held to go over its earnings for the fourth quarter with the analysts.

At other points during the call, Athene executives said:

• Sales of the companies’ indexed annuities have held up pretty well, in spite of the effects of falling rates on annuity sales.
• The company is using IBM’s Watson artificial intelligence system to manage one indexed product index.
• Falling rates and increased competition have depressed sales of multi-year guaranteed annuity contracts to a figure “approaching zero.”
• The pipeline for big pension risk transfer deals, or group annuity sales to employers that want to shed pension risk, remains strong.

Athene is a company based in Pembroke, Bermuda, that has large operations in the United States and reports its performance in U.S. dollars.

The company is reporting $464 million in net income for the fourth quarter on $3.3 billion in revenue, compared with a $104 million net loss on $1.2 billion in revenue for the fourth quarter of 2018.

Here’s a look at the earnings of some other companies based outside the United States with significant life and annuity operations in the United States. In some cases, the companies have financial statements that look much different from typical U.S. public company financial statements.

We’ve converted foreign currency results into U.S. dollar equivalents using the Dec. 31, 2019, exchange rate for the 2019 figures, and the Dec. 31, 2018, exchange rate for the 2018 figures.

We have left out Prudential PLC, the London-based parent of Jackson National Life Insurance Company, because that Prudential won’t report earnings until March.

Manulife Financial Corp. (Toronto)

Manulife is reporting, in Canadian dollars, $5.5 billion in net income for 2019 on $41 billion in revenue, compared with $4.9 billion in net income on $39 billion in revenue for 2018.

That translates into, in U.S. dollars, $4.2 billion in net income on $31 billion in revenue for 2019, compared with $3.6 billion in net income on $29 billion in revenue for 2018.

Manulife is the parent of John Hancock.

Canadian executives said during their company’s earnings call that:

• John Hancock’s Vitality life insurance program, which gives people financial incentives to participate in wellness programs, is selling well and accounted for about 45% of the company’s overall life insurance sales.
• The company’s Aspire program, which is aimed at people with diabetes, appears to be generating a lot of excitement.
• It’s too early to know what the new coronavirus might do to the company’s operations and sales in Asia, but the company has temporarily closed an office in Wuhan, the city in China that has been hardest hit by the coronavirus outbreak.

Aegon N.V. (The Hague, Netherlands)

Aegon is the parent of Transamerica.

Aegon is reporting 910 million euros in net income for the second half of 2019 on 80 billion in gross deposits, up from 253 million euros in net income on 58 billion in gross deposits for the second half of 2018.

That translates into $1 billion in net income on $90 billion in gross deposits for the second half of 2018, up from 283 million euros in net income on 65 billion in gross deposits for the second half of 2018.

The operations in the Americas, including Transamerica, are reporting $663 million in net income for the latest period on $21 billion in deposits, up from a net loss of $229 million on $21 billion in deposits.

New life sales increased to $243 million, from $239 million.

Aegon executives said during their earnings call that they kept U.S. variable annuity rates high, to protect the company’s variable annuity distribution franchise, but responded to falling interest rates by repricing the variable annuities in December.

Executives also said that they see sales of indexed annuities as an area for growth.

Meiji Yasuda Life Insurance Company (Osaka)

Meiji Yasuda is the parent of StanCorp Financial Group Inc.

Meiji Yasuda is reporting 415 billion yen in comprehensive income for the first nine months of 2019 on 3 trillion yen in ordinary income, compared with a net comprehensive loss of 174 billion yen on 3.1 trillion yen in revenue for the comparable period in 2018.

That translates into $3.8 billion in comprehensive income for the first three quarters of 2019 on $28 billion in revenue, compared with a $1.7 billion loss on $28 billion in revenue for the comparable period in 2018.

StanCorp’s base profit increased 9.1%.

Dai-ichi Life Insurance Company (Tokyo)

Dai-ichi Life is the parent of Protective Life Corp.

Dai-ichi Life is reporting 229 billion yen in comprehensive income for the first nine months of 2019 on 2.7 trillion yen in ordinary income, up from 233 billion yen in comprehensive income on 2.7 trillion yen in revenue for the comparable period in 2018.

That translates into $2.1 billion in comprehensive income for the first three quarters of 2019 on $25 billion in revenue, up from $2.1 billion in comprehensive income $24 billion in revenue for the comparable period in 2018.

In yen, Protective Life’s net annualized premiums from new policies fell 14%.

Sun Life Financial Group Inc. (Toronto)

Sun Life is reporting, in Canadian dollars, $2.6 billion in net income for 2019 on $37 billion in revenue, compared with $2.5 billion in net income on $27 billion in revenue for 2018.

That translates into, in U.S. dollars, $2 billion in net income for 2019 on $28 billion in revenue, compared with $1.8 billion in net income on $20 billion in revenue for 2018.

The U.S. business increased sales to $1.1 billion, in U.S. dollars, from $1 billion in 2018.

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

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