Executives at three big U.S. annuity issuers are open to acquiring group benefits businesses but believe recent deal prices have been high.
The executives — at Lincoln Financial, MetLife Inc. and Prudential Financial Inc. — talked about the idea of making a deal last week, during conference calls with securities analysts.
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The companies held the calls to go over first-quarter earnings reports. Each of the companies posted a recording of its call in the investor relations section on its website.
Dennis Glass, chief executive officer of Radnor, Pennsylvania-based Lincoln Financial, and Randy Freitag, the company's chief financial officer, gave the most detailed answers to questions about potential deals.
Lincoln Financial executives said the effects of low interest rates on interest-sensitive products, such as many types of life and annuity products, makes the idea of acquiring businesses with insurance products driven by mainly by morbidity and mortality risk attractive.
Lincoln Financial now gets about 25% of its earnings from those sorts of products, such as group life plans and group dental plans, and would like to increase the share of earnings coming from those sorts of products to 33%, the executives said.
Glass said he'd heard "a couple of rumors about certain companies divesting noncore businesses."
Today, however, "there's not much that we're seeing that fits what we're interested in," Glass said.
