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Athene Wants to Sell More Annuities: Earnings

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What You Need to Know

  • Athene sees other insurers becoming more aggressive this year.
  • The company is interested in expanding RILA distribution.
  • American Equity is adding an annuity that will offer global risk-controlled sector-specific index options.
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Executives at Athene Holding Ltd. say that they are happy that the company sold many annuities in the fourth quarter of 2020, and that they would like to see the company sell many more annuities this year.

Executives from the Hamilton, Bermuda-based insurer and reinsurer talked about how they see the U.S. individual annuity market Wednesday, in written responses to questions tied to the company’s latest earnings release.

Athene’s Results

Athene (NYSE: ATH) is reporting $1.3 billion in net income for the fourth quarter of 2020 on $8.6 billion in revenue, compared with $464 million in net income on $3.3 billion in revenue for the fourth quarter of 2019.

Athene uses “inflows,” or totals of all money paid into products during a given period, as a measure of sales.

Flow associated with sales of big group annuities to employer-sponsored pension plans, or “pension risk transfer” deals, increased to $2.2 billion in the latest quarter, from $809 million for the year-earlier quarter.

Flow into retail annuities increased to $2.3 billion, from $1.1 billion.

Expanded distribution through banks and broker-dealers helped Athene increase sales of non-variable indexed annuities, Athene said in the earnings announcement.

“Athene remains a leader in the fixed annuity marketplace, committing capital to new insurance amid still fragile economic conditions and serving as a source of strength for consumers seeking savings products that can increase their financial security,” the company said.

Athene’s Executives’ Thoughts

Executives at some other publicly traded annuity issuers say they are now uncomfortable with assuming large amounts of additional annuity guarantee risk, because of low interest rates, ups and downs in the stock market, and new accounting rules that make the income statements of annuity issuers look more volatile.

Bill Wheeler, Athene’s president, said in an email that Athene believes it’s well-positioned and “has competitive advantages that are driving a much different result for us than others are experiencing.”

According to figures from the Secure Retirement Institute, “Athene placed first for fixed indexed annuity industry sales in the second and third quarters, and we believe our strong fourth quarter will place us in a similar position when full-year industry results are published,” Wheeler said.

Wheeler said he expects Athene’s retail inflows to face some pressure this year — for reasons that could be good for financial professionals and their clients.

“We’re observing numerous insurers becoming more aggressive, underwriting new business at levels that would imply break-even or negative spread,” Wheeler said.

One of Athene’s goals is to expand distribution for its registered index-linked annuities (RILAs), or indexed annuities filed as variable insurance products, Wheeler said.

“A lot of producers who used to sell [variable annuities] are now selling RILA products,” Wheeler said. Many producers want to get the RILA contracts they sell from the companies that used to provide the non-RILA variable annuities they used to sell, he said.

Belardi, Athene’s CEO, emphasized that Athene believes its uniquely positioned to weather current trends in the broader economy.

“We are strengthened by our multi-channel distribution platform and ability to pivot between our channels, despite the challenging macro backdrop, amidst historically low interest rates and the ongoing COVID-19 crisis,” Belardi said.

American Equity Investment Life Holding Co. (NYSE: AEL)

American Equity Life, another insurer that released earnings Wednesday, is reporting $8.7 million in net income for the fourth quarter of 2020 on $1 billion in revenue, compared with $220 million in net income on $1.1 billion in revenue for the fourth quarter of 2019.

Overall annuity sales increased to $1.8 billion, from $844 million in the year-earlier quarter.

Here’s what happened to deposits into four types of annuities between the year-earlier quarter and the latest quarter:

  • Non-Variable Indexed Annuities: $607 million (down from $833 million)
  • Annual Reset Fixed-Rate Annuities: $1.7 million (down from $1.8 million)
  • Multi-Year Fixed-Rate Annuities: $1.2 billion (up from $81 million)
  • Single-Premium Immediate Annuities: $7.8 million (up from $4.9 million)

Anant Bhalla, the chief executive officer at the West Des Moines, Iowa-based company, said, in a comment included in the company’s earnings announcement, that the company saw itself as reintroducing itself to the market in the fourth quarter, with the launch of new single-premium deferred annuity products at both the American Equity Life unit and the Eagle Life unit.

“We used the fourth quarter to tell distribution we were back and committed to offering competitive products,” Bhalla said.

American Equity is now getting ready to introduce an annuity that will gives purchasers access to “global risk-controlled asset allocation and sector-specific allocations,” as well as to traditional stock index choices, Bhalla said.


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