Andrew Sullivan. Credit: Prudential
Prudential Financial wants to compete hard, but not too hard, for sales of registered index-linked annuity contracts.
Andrew Sullivan, Prudential's CEO, talked about the company's RILA sales philosophy Thursday, during a conference call with securities analysts.
Prudential has generated at least $1 billion in annuity sales every month so far this year, but the company's RILA sales have fallen, Sullivan said.
One reason is that the RILA market "has become more competitive," with 25 issuers, up from five a few years ago, Sullivan said.
Company executives have expected to see the new players working hard to capture market share and "have seen that there will be some aggressive pricing in the marketplace," Sullivan added. "What you should expect from us is disciplined growth. We're going to always make sure we're growing, but that we're also achieving the right level of profitability."
Prudential held the conference call to go over earnings for the third quarter, which ended Sept. 30.
The company streamed the call live on the web and posted a recording on its website.
What it means: Issuers are offering clients great RILAs, but advisors may need to look more carefully to see whether the benefits promised are sustainable.
RILA basics: A RILA is a contract with a crediting rate linked to the performance of one or more investment indexes.
Insurers can often use off-the-shelf options to hedge the risk.
Because the contracts are registered with the U.S. Securities and Exchange Commission, issuers can expose the contract holders to the risk of investment-related loss of principal and charge for any provisions that protect the holders against the risk of loss.
The earnings: Prudential is reporting $1.5 billion in net income for the third quarter on $16 billion in revenue, up from $448 million in net income on $19 billion in revenue for the third quarter of 2024.
Sales of actively sold annuities fell to $3.4 billion, from $3.6 billion.
The company's sales of FlexGuard RILA contracts fell to $1.8 billion, from $2.7 billion, and its sales of fixed annuities increased to $1.5 billion, from $1.3 billion.
Prudential CEO Andrew Sullivan. Courtesy photo
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