Equitable Increases Buffered Annuity Sales
Mark-to-mark accounting caused a net loss, but operating income increased.
Equitable Holdings Inc. increased sales of low-risk buffered annuities in the fourth quarter, and it let its book of higher-risk annuity business shrink.
The firm talked about its annuity sales and life insurance sales Tuesday, when it released its earnings for the latest quarter and all of 2020.
Equitable Holdings (NYSE:EQH) is reporting a $1.3 billion net loss for the fourth quarter of 2020 on $516 million in revenue, compared with a $946 million net loss on $2.7 billion in revenue for the fourth quarter of 2019.
But its operating earnings, which exclude the effects of changes in the value of the company’s derivatives, increased to $748 million for the latest quarter, from $653 million for the year-earlier quarter.
Mark Pearson, Equitable’s CEO, said in a statement, that the company has been doing well enough to have $2.9 billion at the top holding company level, even after returning $3.1 billion to investors through dividend payments and share buybacks.
“We are well-placed for the future and look forward to continuing to provide economically sound and in-demand solutions for our clients,” Pearson said.
Earnings Details
The New York-based life insurer uses derivatives to hedge or 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.
Net results for the latest quarter include $3.6 billion in derivatives losses, compared with $1.7 billion in derivatives losses for the year-earlier quarter.
The company’s operating earnings, which exclude the effects of “mark-to- market” derivatives accounting, increased to $748 million for the latest quarter, from $653 million for the year-earlier quarter.
Individual Annuities
Equitable’s individual retirement products unit is reporting $442 million in operating earnings for the latest quarter on $959 million in revenue, compared with $392 million in operating earnings on $1.1 billion in revenue for the year-earlier quarter.
Individual retirement unit commission spending increased to $78 million, from $72 million.
Life Insurance
The company’s protection solutions unit, which sells life insurance, is reporting $58 million in operating earnings for the latest quarter on $800 million in revenue, compared with $129 million in operating earnings on $842 million in revenue for the year-earlier quarter.
The unit’s commission spending increased to $45 million, from $44 million.
“Unfavorable mortality” helped to increase the protection solutions unit’s policyholder benefits total to $460 million, from $378 million.
Sales
First-year individual annuity premiums fell to $2 billion, from $2.2 billion, but first-year premiums for the Structured Capital Strategies buffered annuity contract, which is designed in such a way that it helps limit Equitable’s exposure to market fluctuation risk, increased to $1.5 billion, from $1.4 billion.
Here’s what happened to first-year premiums for some types of life products between the fourth quarter of 2019 and the latest quarter:
- Universal Life: $0 (down from $1 million)
- Indexed Universal Life: $26 million (down from $56 million)
- Variable Universal Life: $49 million (unchanged)
- Term Life: $4 million (down from $5 million)
- Employee Benefits: $15 million (up from $11 million)
The goddess Athena protects a widow and orphan in The Protection Group, a stained glass window Equitable bought from Nicolas Lorin in 1879, for its first office building. (Photo: Allison Bell/ALM)