Lincoln Financial expects "to bottom out" in life and annuity sales during the fourth quarter, but the carrier plans to bounce back in 2021 with eight new products, said CEO Dennis Glass.
Glass spoke today during a conference call with analysts to review third-quarter earnings. He did not elaborate on the new product lineup. Lincoln was among the first insurers to bite the bullet and undergo repricing of products, he said, a total of 86 different pricing actions across its product suite.
"Sales were down as we reduced benefits on VAs [variable annuities] with living benefits, and we continued to de-emphasize fixed annuity sales," Glass explained. "We expect similar sales trends to persist in fourth quarter. As we look to 2021, we are leveraging product innovation to create additional consumer value propositions spanning already broad product portfolio within the life insurance business."
Lincoln's annuities segment reported a 16% increased in year-over-year operating income to $196 million. Revenues of $1.04 billion were up 0.8% year over year. But total annuity deposits fell 27% to $2.5 billion from the third quarter 2019.
It was a similar story with life insurance, where repricing cut into revenue, Glass said. The life insurance segment reported an operating loss of $311 million, mirroring an operating loss of $245 million in the third quarter 2019. Operating revenues climbed 1.4% to $2.1 billion.
"By enhancing products with separate account investment engines, we see an opportunity to provide consumers with more upside in some of our core products, such as MoneyGuard, where we will be introducing a new product in the first half of next year," Glass said.
MoneyGuard is a universal life insurance policy with a long-term care benefits rider that accelerates the specified amount of death benefit to pay for covered LTC expenses and continues benefit payments after the entire specified amount of death benefit has been paid.
"While we expect sales to be meaningfully lower in the fourth quarter, in part due to record sales in the prior-year quarter, we will be entering 2021 with solutions that provide greater market reach," Glass said. "As we've done in the past, we will utilize our broad and expanding product portfolio and the strongest distribution platform in the industry to position us for growth in 2021."
Glass outlined a four-part strategy that has carried Lincoln through the COVID-19 pandemic and has the company positioned to emerge strong:
Repricing. "Because we led the industry in repricing, and are starting to see competitors follow, we expect sales to bottom out in the fourth quarter, particularly for our annuity and life businesses." That puts Lincoln on track to rebound strong in 2021 and beyond, Glass added.
Strong new business. Entering the fourth quarter, Lincoln is now achieving "at least a 12% return on new business based on the forward curve across all our businesses," Glass said.
Market demand. "Market demand and pricing changes have resulted in the sales of non-guaranteed products to exceed 80% of total sales, a trend we expect to continue," he said.
Distribution network. The Lincoln distribution model is growing amid the pandemic, Glass said. For example, the company added more than 8,000 new producers year-to-date and hosted over 1,400 virtual group meetings, which were attended by more than 50,000 advisers, he said.
"Distribution has been and will continue to be an advantage that distinguishes Lincoln," Glass said.
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.
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