Carriers Report Challenging Environment In 1Q

By Cyril Tuohy
InsuranceNewsNet

The volatile investment environment and lower interest rates made for a challenging business environment in the first quarter of 2015, according to top executives with four companies who reported earnings this week.

Symetra Financial reported first quarter net income of $38.8 million, a 51 percent drop from $79.3 million in the year-ago period due to higher benefit and expenses.

Revenue climbed to $549.7 million from $545.5 million in the year-ago period as the company delivered gains in premium revenue.

The company, which has a strong bank distribution channel, also reported first quarter net income per share diluted of $0.33 cents compared to $0.68 cents in the year-ago period.

Adjusted operating income per share was $0.37 cents, below analyst estimates of $0.44 cents, according to Zacks Investment Research.

President and CEO Tom Marra said in a news release that the company remains on track to deliver “a year of solid earnings, despite some volatility in investment income in the first quarter.”

“Core profitability metrics — base interest spread, underwriting result and operating margins — remain strong, and we are successfully expanding annuity and life insurance account value and premiums revenues,” he said.

Principal Financial Group

Principal Financial reported first quarter net income of $414.2 million, a 41 percent increase compared to the year-ago period.

Net revenue increased 3 percent to $649.1 million, the company also reported.

The company, which has major stakes in a Chile pension fund, reported net income per diluted share of $1.39, compared with $0.95 cents per diluted share in the year-ago quarter.

Principal Financial also reported operating earnings per share of $1.09, outperforming Zacks Investment Research analysts’ estimates of $1.05 per share.

Chairman and CEO Larry D. Zimpleman said in a news release that strong investment performance and the company’s solid distribution relationships helped Principal Financial deliver robust performance at the start of 2015, a year when some competitors have found it difficult to navigate the shoals of falling interest rates.

“We are very pleased with the start to 2015,” Zimpleman said.

The company also announced a second quarter 2015 dividend of $0.38 cents per share of common stock, a 6 percent increase over the first quarter dividend.

Ameriprise Financial

Ameriprise Financial reported first quarter net income of $393 million, a drop of 2 percent from the year-ago quarter.

The company also reported revenue of $3 billion, an increase of 2 percent compared with the year-ago quarter.

Net income per share diluted was $2.08, an increase of 3 percent from the year-ago period.

Chairman and CEO Jim Cracchiolo, said in a news release that the company’s advice, wealth and asset management divisions generated 64 percent of operating earnings.

“Retail client asset growth was strong from net inflows, new client acquisition and experience advice recruiting,” he said.

The company also reported operating earnings per diluted share of $2.18, below analyst estimates of $2.33, according to Zacks Investment Research. A long-term care reserve increase had an unfavorable impact of $0.11 cents per share, the company also said.

The company announced a 16 percent increase in its quarterly dividend to $0.67 cents per share.

Torchmark

Torchmark reported first quarter 2015 net income of $121.6 million, a 9 percent drop from a year ago.

The company, which distributes products and services through American Income Agency, LNL Agency, Family Heritage Agency, UA Independent Agency and a direct response channel, reported net income of $0.95 cents per share, compared with $0.98 cents per share for the year-ago quarter.

First quarter net operating income was $1.04 per share, an increase from $1.01 per share for the year-ago period and in line with Zacks Investment Research analyst estimates.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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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].