One sign of U.S. life insurers’ strength is how well most did in the third quarter.
Life insurers are wrestling with low interest rates, wild stock prices and COVID-19.
But seven of the 11 publicly traded, U.S.-based life and annuity issuers that have posted third-quarter results in the past two weeks have reported net profits, and 10 of the 11 have reported operating profits.
Lincoln National Corp. (NYSE: LNC)
Lincoln Financial — which is officially known as Lincoln National Corp. — is reporting $398 million in net income for the third quarter on $4.8 billion in operating revenue, compared with a $161 million net loss on $4.7 billion in operating revenue for the third quarter of 2019.
The Radnor, Pennsylvania-based company says “product actions taken to reflect lower interest rates” led to a sharp drop in fixed annuity sales.
Lincoln’s annuities unit is reporting $196 million in pre-tax operating income on $1.1 billion in operating revenue, up from $168 million in pre-tax operating income on $1.1 billion in revenue for the year-earlier quarter.
Commissions incurred fell to $248 million, from $295 million.
Here’s what happened to deposits into the two major classes of annuities between the third quarter of 2019 and the latest quarter:
- Fixed Annuities: $87 million (down from $1 billion)
- Variable Annuities: $2.5 billion (up from $2.4 billion)
Life
Lincoln’s life unit is reporting a $311 million pre-tax operating loss on $2.1 billion in operating revenue, compared with a $245 million pre-tax operating loss on $2.1 billion in operating revenue for the year-earlier quarter.
Commissions incurred fell to $171 million, from $212 million.
Here’s what happened to first-year premiums for some types of life products between the third quarter of 2019 and the latest quarter:
- Universal Life: $3 million (down from $11 million)
- Indexed Universal Life: $24 million (down from $37 million)
- Variable Universal Life: $60 million (up from $54 million)
- MoneyGuard: $35 million (down from $67 million)
- Term Life: $28 million (down from $37 million)
- Executive Benefits: $36 million (up from $28 million)
American International Group (NYSE: AIG)
American International Group (AIG) is reporting $299 million in net income for the third quarter on $10 billion in revenue, compared with $973 million in net income on $13 billion in revenue for the third quarter of 2019.
The company’s life and retirement unit is reporting $975 million in adjusted pre-tax income on $3.9 billion in revenue, up from $646 million in adjusted pre-tax income on $3.8 billion in revenue for the year-earlier quarter.
The individual retirement unit is reporting $533 million in adjusted pre-tax income on $1.5 billion in revenue, up from $387 million in adjusted pre-tax income on $1.4 billion in revenue.
Here’s what happened to net flows of assets for several individual retirement products, in the United States, between the third quarter of 2019 and the latest quarter:
- Indexed annuities: A $638 million inflow (down from a $1.2 billion inflow)
- Variable annuities: A $459 million outflow (compared with a $435 million outflow)
- Fixed annuities: A $290 million outflow (compared with a $120 million outflow)
Equitable Holdings (NYSE: EQH)
Equitable Holdings Inc. is reporting a $705 million net loss for the third quarter on $1.8 billion in revenue, compared with a $306 million net loss on $3.1 billion in revenue for the third quarter of 2019.
The New York-based life insurer uses derivatives to protect annuities and other products against changes in stock prices, interest rates and other variables. The company includes fluctuations in the value of derivatives holdings in its revenue and net results.
The company’s operating earnings, which exclude the effects of “mark to market” derivatives accounting, fell to $568 million for the latest quarter, from $673 million.
Equitable’s individual retirement products unit is reporting $371 million in operating earnings for the latest quarter on $1.1 billion in revenue, compared with $465 million in operating earnings on $1.2 billion in revenue for the year-earlier quarter.
Individual retirement unit commission spending fell to $71 million, from $72 million.
The company’s protection solutions unit, which sells life insurance, is reporting $51 million in operating earnings for the latest quarter on $751 million in revenue, compared with $100 million in operating earnings on $855 million in revenue for the year-earlier quarter.
The unit’s commission spending fell to $40 million, from $41 million.
Prudential Financial (NYSE: PRU)
Prudential is reporting $1.5 billion in net income for the third quarter on $13 billion in revenue, up from $1.4 billion in net income on $12 billion in revenue for the third quarter of 2019.
The Newark, New Jersey-based life insurer says after-tax adjusted operating income, which excludes a number of gains and charges, held steady at about $1.3 billion.
The U.S. individual solutions division is reporting $509 million in adjusted operating income before income taxes on $2.8 billion in revenue, compared with $518 million in adjusted operating income before income taxes on $2.8 billion in revenue.
Individual Life Insurance
Here’s what happened to sales of key life products at Prudential between the third quarter of 2019 and the latest quarter:
- Term Life: $34 million (down from $49 million)
- Guaranteed Universal Life: $20 million (down from $24 million)
- Other Universal Life: $20 million (down from $35 million)
- Variable Life: $98 million (up from $67 million)
Sales through Prudential’s own advisors fell to $32 million, from $38 million.
Sales through outside distributors increased to $140 million, from $137 million.
Individual Annuities
Variable annuity sales fell to $1.2 billion, from $2.3 billion.
Fixed annuity sales increased to $376 million, from $319 million.
Here’s what happened to individual annuity sales through specific distribution channels between the third quarter of 2019 and the latest quarter:
- Insurance Agents: $517 million (down from $724 million)
- Wirehouses: $199 million (down from $465 million)
- Independent Marketing Organizations: $61 million (up from $6 million)
- Independent Financial Planners: $706 million (down from $1.3 billion)
Brighthouse Financial (Nasdaq: BHF)
Brighthouse Financial is reporting a $3 billion net loss for the third quarter on $2.2 billion in revenue before “mark-to-market” adjustments for net investment income and net derivatives values changes, compared with $685 million in net income on $2.1 billion in revenue before mark-to-market adjustments for the third quarter of 2019.
The Charlotte, North Carolina-based life insurer says adjusted earnings less notable items, which exclude fluctuations in the estimated value of investments and derivatives, and some unusual gains and charges, increased to $388 million, from $260 million.
Sales of individual annuities increased to $2.3 billion in the third quarter, from $1.8 billion in the year-earlier quarter.
Sales of life insurance increased to $13 million, from $8 million.
Primerica (NYSE: PRI)
Primerica is reporting $112 million in net income for the third quarter on $568 million in revenue, compared with $96 million in net income on $521 million in revenue for the third quarter of 2019.