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AIG's Life Unit Makes $877M: Earnings

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What You Need to Know

  • AIG intends to hold a life business IPO by July 1, 2022.
  • Athene recorded a huge gain in organic cash inflow.
  • At Lincoln, annuity deposits increased 7% from the total for the third quarter of 2020.

The Life and Retirement business at American International Group could be a representative for the entire publicly traded U.S. life and annuity insurer class this quarter: It earned close to $900 million, in spite of low interest rates and the COVID-19 pandemic — and AIG executives are still talking about efforts to spin it off.

Peter Zaffino, AIG’s CEO, today assured investors that AIG is continue to work on separating from the life business.

“Our goal is to deliver a clean separation with minimal business disruption, and emphasis on speed of execution, operational efficiency and thoughtful talent allocation,” Zaffinio said, during a conference call the company to go over results for the third quarter with securities analysts.

The third quarter ended Sept. 30.

Zaffino said AIG has teams working to separate the life business’s data centers, software, real estate and vendor contracts.

The New York-based company expects to hold an initial public offering for the life business’s stock by July 1, 2022.

AIG would start by selling less than than half of its stake in the life business, then reduce its stake to less than 50% later, he said.

AIG’s Earnings

AIG as a whole is reporting $1.7 billion in net income for the third quarter on $13 billion in revenue, compared with $281 million in net income for the third quarter of 2020.

The company says it hopes to turn its Life and Retirement business into a separate company.

That business is reporting $877 million in adjusted pretax income on $4.4 billion in adjusted revenue, compared with $1 billion in adjusted pretax income on $4 billion in adjusted revenue for the year-earlier quarter.

Premiums and deposits increased to $7.2 billion, from $7 billion.

Sales of the company’s main index annuity were strong.

Many other life and annuity issuers have also reported earnings over the past two weeks…

Athene Holding

The Hamilton, Bermuda-based insurer is reporting $770 million in net income for the third quarter on $8.7 billion in revenue, compared with $884 million in net income on $3.3 billion in revenue for the year-earlier quarter.

“Gross organic inflows” of cash increased 61%, to $12 billion.

Retail inflows fell 4%, to $2.4 billion. Increased competition for multi-year guaranteed year guaranteed annuity (MYGA) contracts pinched retail MYGA sales, but non-variable indexed annuity sales were strong, the company says.

Lincoln National Corp.

The Radnor, Pennsylvania-based life insurer is reporting $318 million in net income for the third quarter on $5.2 billion in revenue, compared with $398 million in net income on $4.8 billion in revenue for the year-earlier quarter.

Annuity deposits increased 7% from a year earlier, to $2.7 billion, with an increases in the sale of annuities offering guarantees offsetting a decrease in sales of contracts with out guarantees.

Sales on sales commissions and related items increased 19%, to $1.9 billion.

The best sales results were for group disability insurance. Sales of group disability insurance increased 18%, to $20 million.

Equitable Holdings

The New York-based financial services company is reporting $765 million in net income for the third quarter on $3.6 billion in revenue, compared with a net loss of $705 million on $1.8 billion in revenue for the year-earlier quarter.

The results were affected by changes in the value of the company’s derivatives. The drop in the value of the derivatives narrowed to $185 million, from $1.5 billion in the third quarter of 2020.

Operating earnings increased to $818 million, from $568 million.

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Spending on commissions and other distribution-related payments increased to $436 million, from $342 million.

Sales of the Structured Capital Strategies annuity contract, which is a pioneer in the registered index-linked annuity market, were strong, and the product attracted $1.9 billion in first-year premium.

Principal Financial Group

The Des Moines, Iowa-based financial services company is reporting $360 million in net income for the third quarter on $3.4 billion in revenue, compared with $236 million in net income on $3.3 billion in revenue for the year-earlier quarter.

Sales of the company-owned life insurance policies used in executive compensation plans increased 70% from the total for the third quarter of 2020.

Ameriprise Financial

The Minneapolis-based financial services company is reporting $1 billion in net income for the third quarter on $3 billion in revenue, compared with a net loss of $140 million on $3 billion in revenue for the year-earlier quarter.

The retirement and protection solutions division sells products such as life insurance and annuities.

That unit is reporting $192 million in pretax adjusted operating earnings on $834 million in revenue, compared with $206 million in operating earnings on $781 million in revenue.

Ameriprise says it continued to focus on selling products without significant guarantees, such as variable annuities without living benefit riders, structured annuities and variable universal life insurance.

Retirement product sales increased 28% from the year-earlier total, to $1.4 billion.

Brighthouse Financial

The Charlotte, North Carolina-based life insurer is reported $361 million in net income for the third quarter on $2.5 billion in revenue, compared with a net loss of $3 billion on $309 million in revenue for the year-earlier quarter.

The results were affected by changes in the value of the company’s derivatives. The company recorded a $56 million gain in the value of its derivatives, compared with a $1.9 billion decrease in value in the third quarter of 2020.

An item Brighthouse describes as “adjusted earnings less notable items,” increased to $514 million in the latest quarter, from $388 million in the year-earlier quarter.

Annuity sales increased 1% from a year earlier, to $2.4 billion. Sales of variable annuities and registered index-linked annuities were up 54$, and sales of non-variable annuities were lower.

Brighthouse has been working to sell a life insurance policy that comes with long-term care benefits. Sales of life insurance policies, including the life-LTC hybrid, increased to $27 million, from $13 million.

Horace Mann

The Springfield, Illinois-based multiline insurer is reporting $16 million in net income for the third quarter on $330 million in revenue, compared with $36 million in net income on $337 million in revenue for the year-earlier quarter.

Net annuity contract deposits increased 2.3% from the year-earlier total, to $121 million, and life sales increased 30%, to $3.5 million.

Life mortality costs increased 14%, to $10 million.

Kansas City Life Insurance Company

The Kansas City, Missouri-based life insurer is reporting a $6 million net loss for the third quarter on $121 million in revenue, compared with a $1.2 million net loss on $125 million in revenue for the year-earlier quarter.

Premiums from new sales were down for all product lines, because of the effects of the COVID-19 pandemic, but renewal premiums for insurance already in place increased 2%.

Mortality cost resulting from the COVID-19 pandemic accounted for 8% of the total mortality cost for the third quarter.

(Image: Adobe)

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