Allianz Life's annuity revenue a bright spot
August 7, 2010 by Dan Browning
Profits slipped in the second quarter, though premiums exceeded expectations.
By DAN BROWNING, Star Tribune
Last update: August 6, 2010 – 8:14 PM
Allianz Life Insurance Co. of North America reported Friday that operating profits slipped in its second quarter due to the difficult economy, but its $2.6 billion in reported premiums for the quarter exceeded company expectations.
The Minneapolis-based unit of German insurance giant Allianz reported a second-quarter profit of $67 million, down from $110 million in the first quarter. On the bright side, fixed-index annuity premiums rose 9 percent to $1.6 billion, while variable annuity sales jumped 44 percent above the second quarter of 2009.
“Our sales results and the underlying profitability of new premiums are ahead of expectations for the year,” Allianz Life President & CEO Gary C. Bhojwani said in a prepared statement. “The market challenges of the second quarter were comparable to those witnessed in the third quarter of 2008, and yet our new business margins and operating profit were both notably stronger.”
Bill Gaumond, vice president of finance, said in an interview that some cost controls the company began putting into place in 2008 and some price restructuring last year helped to keep the profits coming despite other stresses in the economy.
“We continue to have excellent sales momentum,” Gaumond said. Consumers seeking stability and a guaranteed income stream are showing renewed interest in fixed-indexed annuities, he said. “We’re very confident and optimistic about where things are going.”
Gaumond said Allianz Life’s parent company, Munich-based Allianz SE, remains strong. The parent company’s solvency ratio, which is a measure of actual capital to required capital from a regulatory standpoint, has grown to 170 percent in its latest earnings release, he noted. “So they continue to build capital, build security behind the company,” Gaumond said.
Allianz SE maintained its full-year operating profit outlook of 7.2 billion euros. “That number speaks to its strength,” Gaumond said.
As for Allianz Life, he said it continues to hire “prudently” and has 66 openings nationwide, mostly in the Twin Cities area.
Dan Browning • 612-673-4493