Life insurance companies ready for analysts to pick apart Q1 earnings

First-quarter earnings will reveal how well insurance companies are adapting to higher interest rates and taking advantage of a strong annuity sales environment.

Earning season takes off this week with some major life insurance companies reporting results, including Prudential and American International Group. Earnings calls with insurance executives should shed further light on sales trends, as well as changing investment decisions and the industry's growing technology commitment.

But the underlying economic indicators remain troubling to some degree.

"Corporate America faces some of the same headwinds it did during fourth-quarter earnings season, including slow global economic growth, cost pressures from still-elevated (but easing) inflation, some currency drag from a stronger U.S. dollar last quarter compared with the year-ago quarter, and geopolitical instability, particularly in Eastern Europe and China, that has put some upward pressure on costs," wrote Jeffrey Buchbinder, chief equity strategist for LPL Financial.

Rate hikes help bottom line

The Federal Reserve is expected to raise its benchmark interest rate for the 10th time on Wednesday. Another quarter-point rate increase on Wednesday would leave the Fed’s key rate at 5.1%, a 16-year high and a full 5 percentage points higher than in March 2022.

A significant portion of insurance companies' investment portfolios are interest-rate dependent. An investment asset base, couple with secondary investments in real estate, hedge funds and other sources, means insurers are could see substantial earnings from the interest rate hikes to date.

Life insurers are tailoring offerings to take advantage of the consumer rush to protection-focused products. Likewise, they are tailoring products to cover a variety of living benefits such as critical illness and long-term care.

As a result, LIMRA is forecasting record-level sales in the $300+ billion range for the next several years.

Several insurers are also in the midst of expense-cutting efforts. Increasing investments in technology is aiding those efforts as insurers can deliver products quicker and with streamlined underwriting.

A selected schedule of earnings includes:

May 2

Prudential Financial. When last seen, Prudential Financial executives announced a $558 million loss for the fourth quarter 2022.

May 3

Globe Life. The Texas-based life insurer surpassed Wall Street expectations with fourth-quarter earnings.

Equitable Holdings. The New York City-based Equitable reported a net income loss for the fourth quarter, badly missing Wall Street expectations.

American International Group. In addition to its other lines, AIG is a leading P&C insurer around the world and catastrophic losses are impacting its bottom line.

MetLife. Investment income loss hurt MetLife during a tough fourth quarter.

May 8

Apollo Global Management. The private equity company also owns Athene, a top seller of annuities. Apollo executives credited Athene sales during its fourth-quarter earnings call.

Brighthouse Financial. Executives touted a record year for annuities, but a down one for life sales, during the fourth quarter.

American Equity. Company executives set aside a dispute with major investor Brookfield Asset Management Re to report strong annuity sales in the fourth quarter.

May 9

Corebridge Financial. Split off from AIG, Corebridge recorded a big loss in the fourth quarter.

Lincoln Financial. Lincoln began a long climb back with a modest fourth quarter. The insurer took a $2.6 billion loss in the third quarter.

Jackson National. Jackson explained its pivot away from variable annuities during its fourth quarter call with analysts.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.