Lincoln Financial shifted during the second quarter more toward selling variable annuities that give it flexibility, and away from selling contracts with built-in account value protection.
The Radnor, Pennsylvania-based company — which is officially known as Lincoln National Corp. — said variable annuity sales fell just 6% between the second quarter of 2019 and the latest quarter, in spite of the effects of the COVID-19 social distancing rules and investment market turmoil.
“Fixed annuity sales decreased 77% over the same period due to product actions taken to respond to lower interest rates,” the company said Wednesday, in its earnings announcement.
Lincoln is reporting a $94 million net loss for the second quarter on $3.5 billion in revenue, compared with $363 million in net income on $4.3 billion in revenue for the second quarter of 2019.
The company noted that it is being careful about capital and debt. It has 444% risk-based capital ratio, which means that its actual level of capital is much higher than the minimum level of capital regulators expect it to have.
Lincoln said it has already paid off any debts that were scheduled to mature before 2023.
Lincoln’s annuities unit is reporting $237 million in pre-tax operating income on $1 billion in operating revenue, compared with $266 million in pre-tax operating income on $1.2 billion in revenue for the year-earlier quarter.
Commissions incurred fell to $246 million, from $287 million.
Here’s what happened to deposits into two types of annuities between the second quarter of 2019 and the latest quarter:
- Fixed annuities: $299 million (down from $1.3 billion)
- Variable annuities: $2.2 billion (down from $2.4 billion)
Lincoln’s life unit is reporting a $52 million pre-tax operating loss on $1.6 billion in operating revenue, compared with $207 million in pre-tax operating income on $1.8 billion in operating revenue for the year-earlier quarter.
Commissions incurred fell to $173 million, from $197 million.
Lincoln said it expects to incur about $90 million in earnings impact for every 100,000 in U.S. COVID-19-related deaths.
Here’s what happened to first-year premiums for some types of life products between the second quarter of 2019 and the latest quarter:
- Universal life: $5 million (down from $15 million)
- Indexed universal life: $23 million (down from $25 million)
- Variable universal life: $55 million (up from $53 million)
- MoneyGuard: $36 million (down from $56 million)
- Term life: $36 million (down from $37 million)
- Executive benefits: $4 million (down from $24 million)
Athene Holding Ltd. (NYSE:ATH)
Athene is reporting $720 million in net income for the latest quarter on $3.4 billion in revenue, compared with $824 million in net income on $4.4 billion in revenue for the second quarter of 2019.
The Pembroke, Bermuda-based life insurer recorded $1.3 billion in investment gains for the quarter, down from $2.5 billion in investment gains for the year-earlier quarter.
American Equity Investment Life Holding Co. (NYSE:AEL)
American Equity Life is reporting a $253 million net loss for the second quarter on $920 million in revenue, compared with $19 million in net income on $706 million in revenue for the second quarter of 2019.
The net results were affected partly by a $1.2 billion change in the fair value of embedded derivatives.
Operating income, which excludes the effects of that value change and some other items, fell to $93 million, from $100 million.
Overall annuity sales fell to $559 million, down 63% from the total for the year-earlier quarter, the company said.
Anant Bhalla, the company’s chief executive officer, said in a comment, included in the company’s earnings announcement, that annuity sales slowed in the second quarter due to COVID-19-related social distancing, and the company decided to focus on updating operations and products.
He said the company launched the Destinations 9 and Destinations 10 index annuities, which includes an index developed with Bank of America, and that he company is now starting to offer those products through independent agents.
Primerica is reporting $72 million in net income for the second quarter on $525 million in revenue, compared with $97 million in net income on $505 million in revenue for the second quarter of 2019.
Here are how some of the Duluth, Georgia-based company’s distribution indicator numbers changed, year-over year:
- Year-end life-licensed sales force: 134,157 (up from 129,550)
- Recruits: 133,123 (up from 63,223)
- Average number of policies sold per rep per month: 0.24 (up form 0.20)
The number of life insurance policies sold increased to 94,044 policies, from 78,664 policies.
Spending on sales-based sales commissions increased to $57 million, from $51 million.