The domestic life insurance and retirement services operations of American International Group Inc. (AIG) have reported $998 million in pretax income for the third quarter.
AIG, New York (NYSE:AIG), recorded a $222 million pretax loss for the unit in the third quarter of 2009.
AIG is reporting an overall net loss of $2.4 billion for the latest quarter on $19 billion in revenue, compared with net income of $455 million on $20 billion in revenue for the third quarter of 2009.
But the figures for the latest quarter include about $4.5 billion in restructuring charges related to the sale of overseas operations such as American Life Insurance Company, AIG Star Life Insurance Company and AIG Edison Life Insurance Company. AIG is selling the operations to raise the cash it needs to repay the U.S. Treasury Department and the Federal Reserve Bank of New York for aid provided in connection with the 2008 mortgage market crisis.
AIG increased operating income at the general insurance and domestic life and retirement operations that it wants to keep to $2 billion, from $1.9 billion.
Domesitc life unit pretax results improved mainly because a sharp drop in realized investment losses. Excluding the effects of investment impairments, a decline in investment income cut pretax operating income at the domestic life unit to $978 million, from $1.2 billion.
But domestic premiums, deposits, and other considerations increased 2%, to $4.4 billion, and AIG says it sees signs consumers and agents frightened off by the 2008 crisis are starting to return.
"Group retirement products and individual variable annuities reported increases in sales," AIG says. "Individual variable annuity sales increased due to product enhancements, reinstatement of new sales activity at a number of key broker-dealers and increased wholesaler productivity."
Annuity surrender levels are returning to normal, and the American General unit has had success with recruiting new agents and advisors and with increasing distribution productivity, AIG says.
AIG President Robert Benmosche says AIG will continue its "aggressive plan to close pending transactions in order to repay the [New York Fed] in full, and provide for the exit of U.S. Treasury ownership over time."
The sale of the American General Finance unit should close later this year, and the sale of AIG Star and AIG Edison should close early next year, Benmosche says.
Moody's Investors Service, New York, has noted that most of AIG's net loss for the latest quarter was the result of government funding arrangements and charges related to discontinued operations. But the company's core insurance operations continue to face difficult market conditions and exposure to sister businesses with weaker credit profiles, the firm says.
SunAmerica, a U.S. life unit with an A1 insurer financial strength rating from Moody's, "is exposed to further losses on commercial mortgage loans and mortgage-backed securities, albeit this exposure is mitigated by strong regulatory capital levels and the likelihood of parental support if needed," Moody's says.
Chad Hemenway contributed information to this report.
In other earnings news:
LIFE AND ANNUITY
Prudential Financial Inc., Newark, N.J. (NYSE:PRU)
3Q 2010 Results
NET INCOME: $1.2 billion
REVENUE: $10 billion
3Q 2009 Results
NET INCOME: $1.1 billion
REVENUE: $8.5 billion
- Growth in variable annuity account values helped to increase asset-based fees.
- U.S. individual and group life mortality has been less favorable than it was in the third quarter of 2009.
Hartford Financial Services Group Inc., Hartford (NYSE:HIG)
3Q 2010 Results
NET INCOME: $666 million
REVENUE: $6.7 billion
3Q 2009 Results
NET INCOME: $220 million loss
REVENUE: $5.2 billion
- Global annuity deposits fell 71%, because Hartford has stopped selling annuities overseas and is shifting to a new product in the United States.
- Group disability claims experience is elevated, and "the company is implementing rate changes to address loss cost and interest rate trends."
- Individual life sales were up 14%, and retirement plan deposits were up 13%.
Lincoln National Corp., Radnor, Pa. (NYSE:LNC)
3Q 2010 Results
NET INCOME: $246 million
REVENUE: $2.6 billion
3Q 2009 Results
NET INCOME: $153 million
REVENUE: $2.1 billion
- Lincoln President Dennis Glass says growth in retirement deposits and net flows was strong, in part because of the introduction of new products and in part because of expansion of the company's distribution network. "While economic conditions continue to influence parts of our business, steady consumer demand for our insurance and retirement products has contributed to consistent sales and positive aggregate net flow results," Glass says.
- Individual variable annuity deposits increased 11%, to $2 billion, but total net flows of cash into the company's individual annuities fell to $1.3 billion, from $1.6 billion, because of a drop in fixed annuity flows.
- Lincoln adjusted long-term portfolio yield assumptions to reflect current low interest rates.
- Disability income claims were higher than Lincoln had expected.
CNO Financial Group Inc., Carmel, Ind.. (NYSE:CNO)
3Q 2010 Results
NET INCOME: $49 million
REVENUE: $1.1 billion
3Q 2009 Results
NET INCOME: $15 million
REVENUE: $1.1 billion
- Operating income increased to $96 million, from $85 million, at the Bankers Life unit, and fell to $27 million, from $29 million, at the Washington National unit.
Protective Life Corp., Birmingham, Ala. (NYSE:PL)
3Q 2010 Results
NET INCOME: $70 million
REVENUE: $803 million
3Q 2009 Results
NET INCOME: $28 million
REVENUE: $691 million
- The company sold $66.5 million in stable value products during the quarter and ended the quarter with $3.1 billion in stable value product deposits.
The Phoenix Companies Inc., Hartford (NYSE:PNX)
3Q 2010 Results
NET INCOME: $25 million loss
REVENUE: $506 million
3Q 2009 Results
NET INCOME: $10 million
REVENUE: $528 million
- Annuity sales were up, but the company was still experiencing some credit impairments.
FBL Financial Group Inc., West Des Moines, Iowa (NYSE:FFG)
3Q 2010 Results
NET INCOME: $29 million
REVENUE: $298 million
3Q 2009 Results
NET INCOME: $16 million
REVENUE: $308 million
- Sales of traditional annuities, traditional life and universal life increased 4%.
- Sales of variable annuities fell 32%, in part because FBL is discontinuing variable annuity sales.
Primerica Inc., Duluth, Ga. (NYSE:PRI)
3Q 2010 Results
NET INCOME: $40 million
REVENUE: $241 million
3Q 2009 Results
NET INCOME: $124 million
REVENUE: $551 million
- Primerica went public April 1.
- Direct premiums increased to $547 million, from $532 million, but reinsurance arrangements cut the amount of net premiums included in the revenue figure for the latest quarter.
National Western Life Insurance Company, Austin, Texas (Nasdaq:NWLI)
3Q 2010 Results
NET INCOME: $13 million
REVENUE: $151 million
3Q 2009 Results
NET INCOME: $1.1 million loss
