Fidelity & Guaranty Reports Higher First-Quarter Profit Ahead of Merger With Anbang
February 23, 2016 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
DES MOINES, Iowa – Annuity and life writer Fidelity & Guaranty Life reported higher first-quarter net income fueled by increased premiums, fees, and investment income along with reduced benefits payouts and costs.
The company’s fiscal year begins Oct. 1, and its first quarter ends Dec. 31.
Net income rose to $48 million from $14 million in 2014, and total revenue increased to $329 million from $298 million, the company said in a statement. That included $15 million in premium, $222 million in investment income, and $29 million in fees — all higher than a year ago.
Benefits and expenses, meanwhile, fell to $250 million from $269 million.
“We had a good start to the year,” according to Chris Littlefield, president and chief executive officer. He noted the company’s fixed annuity division operates in “a very competitive environment that we expect will continue.” Fixed indexed annuity sales dropped to $437 million in the quarter, versus $648 million a year ago.
But assets under management rose 6% to $18.23 billion. Littlefield also said expanded distribution of indexed universal life drove “significant growth” in that line in the quarter.
Fidelity’s merger with Anbang Insurance Group, based in Beijing, is on track to close in the second quarter, Littlefield reported. Although it does not require federal clearance under the Hart-Scott-Rodino Act, the company needs approvals from regulators in New York, Iowa, Vermont, China and from the Committee on Foreign Investment in the United States. The inter-agency federal committee evaluates deals that involve takeovers by foreign-based companies.
The deal was announced in November (Best’s News Service, Nov. 9, 2015).
Fidelity & Guaranty is a top 10 writer of fixed index annuities in the United States, according to BestLink. In 2014, the insurer wrote $2.52 billion in direct individual annuity premiums, comprising 85.3% of its total premiums for the year, according to BestLink.
The operating members of Fidelity & Guaranty Life Group have a current Best’s Financial Strength Rating of B++ (Good).
In afternoon trading Feb. 22, shares of Fidelity and Guaranty Life (NYSE: FGL) were at $24.84, down 0.36% from their previous close.