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May 14, 2019 at 02:54 PM
The trickle of first-quarter earnings releases has started to slow.
Here’s a look at some of the announcements that have flowed out in the past week.
Life and Annuity
American International Group Inc. (Stock symbol: AIG)
AIG is reporting $937 million in net income for the first quarter on $12 billion in revenue, compared with $949 million in net income on $12 billion in revenue for the first quarter of 2018.
The company’s life and retirement unit is reporting $924 million in adjusted pretax income on $4.2 billion in revenue, up from $892 million in adjusted pretax income on $3.5 billion in revenue.
Here’s what the company said happened to net flows of cash for several key individual retirement products, in the United States, between the first quarter of 2018 and the latest quarter:
- Indexed annuities: +$1.2 billion (up from +$615 million)
- Variable annuities: -$576 million (compared with -$477 million)
- Fixed annuities: +$211 million (compared with -$781 million)
Kevin Hogan, AIG’s chief executive officer for life and retirement operations, said the company is letting guaranteed universal life sales fall because of concerns about the current interest environment.
At the individual retirement unit, annuities are selling well right now, he said.
Retail mutual funds are now the individual retirement products that seem to be facing headwinds, he said.
Athene Holding Ltd. (Stock symbol: ATH)
Athene — a company that buys other life and annuity companies, and blocks of life and annuity business — is reporting $708 million in net income for the first quarter on $5 billion in revenue, compared with $277 million in net income on $1 billion in revenue for the first quarter of 2018.
Retail sales increased to $1.8 billion, from $1.3 billion.
(Related: Athene Reinsures $9.6 Billion in Lincoln Annuities)
“The increase in our retail channel was driven by significant growth in our bank channel, including the addition of new bank partners, the rising rate environment and new product introductions,” the company says in the quarterly report it filed with the U.S. Securities and Exchange Commission. “We aim to grow our retail channel by deepening our relationships with our approximately 55 independent marketing organizations (IMO); more than 40,000 independent agents; and our growing network of 10 small and mid-sized banks and 79 regional broker-dealers.”
Athene executives talked about a new “inorganic” expansion effort — Athene Co-Invest Reinsurance Affiliate (ACRA) — during a conference call the company held to go over the latest earnings with securities analysts.
ACRA will use cash from outside investors to make big deals, according to Jim Belardi, Athene’s chief executive officer.
Apollo Global Management, another financial services company, has already raised $1 billion in investor money for ACRA and hopes to raise another $3 billion by Sept. 30, Belardi said.
(Related: Apollo Seeks $5.5 Billion in Capital for Life-Related Deals)
The ACRA unit will handle big pension risk transfer deals, reinsurance and funding agreements as well as acquisitions, Belardi said.
Athene executives said ACRA will give the company about $7 billion in deal capacity.
Bill Wheeler, Athene’s president, said ACRA will help Athene go after news set of deal targets.
“The competition in the M&A side of this business is for the very small vanilla blocks that don’t have a lot of complexity,” Wheeler said. “There’s a lot of hunger for those blocks. The pricing just doesn’t seem to make very much sense to us. When you move away from that, a lot of our competition falls away.”
AXA Equitable Holdings Inc. (Stock symbol: EQH)
AXA Equitable is reporting a $709 million net loss for the first quarter on $1.7 billion in revenue, compared with $214 million in net income on $2.9 billion in revenue for the first quarter of 2018.
The net loss, and the drop in revenue, are due mainly to a large loss on the net value of derivatives arrangements.
Comprehensive income, which treats derivatives and some other items in a different way, increased to $108 million, from a net loss of $624 million in the year-earlier period.
Operating earnings increased to $509 million, from $483 million.
Spending on commissions and other distribution-related payments fell to $281 million, from $291 million.
(Related: AXA S.A. to Sell Some of Its AXA Equitable Stock)
Here’s what happened to first-year premiums and deposits for some key types of individual retirement products between the first quarter of 2018 and the first quarter of 2019:
- SCS variable annuities: $1.1 billion (up from $775 million)
- Retirement Cornerstone variable annuities: $583 million (down from $627 million)
- Investment Edge variable annuities: $110 million (down from $132 million)
Mark Pearson, AXA Equitable’s chief executive officer, said during a conference call the company held to go over first quarter earnings with securities analysts that the net loss was due to “non-economic items related to VA [variable annuity] product features.”
