Profit Flat, Premium Falls at Allianz Life

Allianz Life Insurance Co. of North America, one of the biggest life and annuity sellers in the U.S., ended 2017 with an operating profit of $1.18 billion compared to $1.06 billion in 2016, the company reported Friday.

Total premium, hit hard by regulatory changes and low interest rates, fell 16 percent to $11 billion last year compared to 2016, the Minneapolis-based company said.

Sales of fixed indexed annuities (FIA) in 2017 fell 26 percent to $7.5 billion compared to 2016, Allianz Life said.

While FIA sales shrunk, sales of buffered variable annuities, also known as index variable annuities, rose 50 percent to $2.17 billion last year compared to 2016, the company said.

New life insurance premium rose 31 percent to $94 million in 2017 compared to the year-ago period, Allianz Life said.

Allianz Life paid out more than $2.7 billion in benefits to its policyholders and contract owners via life insurance and annuity payments, up 4 percent from the prior year.

Demand Strong, Despite Lower Forecast

“We see growing demand for our protection and retirement income products, and anticipate another strong year in 2018 as we continue to introduce product innovations and new digital capabilities,” said Walter White, president and CEO of Allianz Life, in a news release.

Fourth-quarter and year-end 2017 sales for the life and annuity market in the U.S. are expected next week.

Industry analysts expect overall U.S. variable annuity sales to shrink by about 10 to 15 percent in 2017 compared to 2016, with many people pointing to Department of Labor’s fiduciary rule as a big reason.

Variable annuity sales in the U.S. reached $105 billion in 2016.

Fixed indexed annuity sales, which hit a record $61 billion in 2016, are expected to fall between 5 and 10 percent in 2017 compared to 2016.

Net Income Falls at Parent Allianz SE

Allianz Life of North America, the North American subsidiary of parent Allianz SE in Munich, contributed nearly 10 percent of the parent company’s operating profit last year, about the same as it did in 2016.

Allianz SE reported 2017 net income fell 2.3 percent to $8.1 billion compared to 2016.

Operating profit rose 0.4 percent in 2017 to $13.3 billion compared to 2016, Allianz SE said.

Revenue last year at the global insurer rose 3 percent to $151.3 billion compared to 2016, the company said.

Globally, growth in the company’s life and health business accelerated in 2017 as the company shifted its business mix to more capital-efficient products like buffered variable annuities, said Giulio Terzariol, CFO of Allianz SE.

“This approach is rewarding customers and shareholders alike,” he said.

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].