By Cyril Tuohy
Protective Life announced that second quarter net income rose 40 percent to $103.2 million, or $1.27 per share diluted, from $76.2 million, or 91 cents a share diluted compared to the year-ago period.
The variable annuities, stable value products and asset protection lines of business were the quarter’s profit engines, the company also said.
Operating income from annuities rose 27 percent to $36.38 million, income from stable value products soared 41 percent to $22.46 million, and income from asset protection jumped 14 percent to $7.38 million, the company said.
“Very strong investment income, strong earnings in the variable annuity line, favorable mortality in the life marketing and better than plan results in the asset protection segment more than offset the adverse impact of several items and adjustments in the quarter,” John D. Johns, chairman, president and chief executive officer, said in a statement.
Despite a 73 percent increase in sales of life insurance, operating income from the segment dropped 18 percent to $24.7 million due to a $4.2 million accrual related to a 2003 reinsurance contract, an increase in expenses and life mortality trends that were less favorable compared to last year’s second quarter, the company also said.
“We did enjoy strong sales in each of our three retail segments, life insurance, annuities and asset protection,” said Johns, in a conference call with analysts.
Operating income from Protective Life’s acquisition segment decreased 32 percent to $29.4 million due in large part to “unreported deaths” on terminated life policies, the cost of reinsuring a larger-than-expected runoff block of business, and interest expenses related to the runoff, the company said.
Protective Life, which announced in April that it would buy MONY Life Insurance Co. for $1.06 billion, expects to close on the deal Oct. 1, as the company makes “good progress on a variety of fronts,” Johns also said.
Operating income from the company’s variable annuities segment was $36.4 million compared to $28.6 million in the year-ago period. Gains of $15.5 million from variable annuities due to fees and the growth in account balances more than made up for lower income from company’s fixed annuities book of business, the company said.
Operating income from fixed annuities was $12.6 million, compared to $20.5 million in the year-ago period.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].
© Entire contents copyright 2013 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.