12 Insurers Release Q4 Results

A number of insurers have begun to release their financial results for Q4 2010. The following is a compilation of their announcements:

 

American International Group Inc.

American International Group Inc. reported a net income of $11.2 billion for the quarter ended Dec. 31, 2010, and $7.8 billion for the full year 2010. According to a statement, AIG’s diluted earnings per share were $16.60 for the fourth quarter and $11.60 for the full year, compared with a loss of $18.53 for the third quarter of 2010, and losses of $65.51 and $90.48 for the fourth quarter and full year of 2009, respectively.

Included in the 2010 fourth quarter results is a previously announced $4.2 billion net charge to strengthen Chartis loss reserves and gains of $17.6 billion from the sale of divested businesses, primarily from the proceeds of the AIA Group Limited (AIA) initial public offering and a gain of $4.1 billion from the sale of American Life Insurance Co. (ALICO), included in discontinued operations. After-tax operating loss attributable to AIG was $2.2 billion for the quarter and $898 million for the full year.

"We completed several key restructuring milestones in the quarter and we remain focused on long-term growth and building value at our ongoing insurance operations and other businesses," Robert Benmosche, AIG president and CEO, said in a statement. "In 2010, we said we would realign AIG to grow our businesses and to ultimately repay the U.S. taxpayer. We remain extremely grateful to the taxpayers and have made significant progress since January 2010 towards independence from this support.

"At Chartis, net premiums written remained healthy as we maintained price discipline,” he continued. “In the SunAmerica Financial Group businesses, profitability has held steady and investment performance was solid. SunAmerica's new business production, customer retention rates, and revitalized distribution relationships speak to the resiliency of this franchise. At International Lease Finance Corp., we are appropriately managing the fleet and the balance sheet, and United Guaranty Corp. saw first-lien delinquencies decline.

"Our results for the quarter reflected the effects of our comprehensive review of Chartis reserves,” Benmosche added. “As we disclosed earlier this month, we strengthened reserves related to AIG-specific and emerging industry loss trends, primarily in asbestos and workers' compensation, among other lines. Our reserve review updated our estimated losses for all years, including the more recent accident years 2006 to 2009 - years to which approximately 50 percent of the reserve strengthening, excluding asbestos, applied. At Chartis, we continue to hold more statutory surplus than any commercial property-casualty insurance competitor in the U.S. market.

"In 2011, as we emerge from our restructuring, AIG will focus on growing our already strong businesses domestically and around the world, risk and capital management, strategic asset management, and cost savings throughout the organization," Benmosche concluded.

 

AEGON                       

AEGON announced the following Q4 results in a release:

Underlying earnings before tax in Q4 up 2% to EUR 489 million, bringing the total for 2010 to EUR 2 billion

Net income in Q4 of EUR 318 million resulting in a net profit for the year of EUR 1.8 billion

New life sales stable at EUR 558 million; full year sales up 5% to EUR 2.2 billion

Gross deposits increased 16% to EUR 7.8 billion adding to a total of EUR 32.6 billion in full year deposits

Excess capital* of EUR 3.8 billion, of which EUR 1.7 billion at the holding; IGDa) solvency ratio of 198%

The insurer says it is well on track with its transformational process and aims to deliver sustainable earnings growth with an improved risk-return profile. However, underlying earnings and other key metrics in 2011 will be affected by strategic management actions. From this new base, the company announces specific targets, which reflect AEGON's pursuit of these objectives:

Grow underlying earnings before tax on average by 7 to 10% per annum

Achieve a return on equity of 10% to 12% in the medium term

Increase fee businesses to 30% to 35% of underlying earnings before tax by 2015

Increase normalized operational free cash flow14 with 30% by 2015

Intent to resume dividend payments with dividend of EUR 0.10 per common share related to H2 2011 in May 2012

“AEGON has delivered a strong set of results for the full year 2010,” Alex Wynaendts, CEO, said in a statement. “During the year, we have concentrated our efforts on executing a consistent strategy aimed at sharpening our focus on our core business, improving our risk-return profile and executing significant cost reduction programs. As a result of our efforts over the past years, AEGON is a different company today. Today’s equity offering, together with internal resources, including proceeds from divestments, will position us to repurchase all remaining core capital securities provided by the Dutch State by the end of June 2011. The equity offering supports our strategy to maintain a strong capital position, including achieving our target ratio of 75% core capital by the end of 2012. After completing the repurchase, we intend to resume dividend payments in May 2012. AEGON has demonstrated its ability to deliver and we are committed to delivering the long-term value that our customers, shareholders and business partners have every reason to expect.”

 

American National Insurance Co.

American National Insurance Co. issued a release announcing its fourth quarter 2010 results. According to the company, it posted a net income of $35,570,000 ($1.33 per diluted share) compared to net income of $34,975,000 ($1.31 per diluted share) for the same period in 2009.

Fourth quarter after tax operating earnings, which exclude net realized investment gains and losses, were $21,952,000 ($0.82 per diluted share), as compared with $30,134,000 ($1.13 per diluted share) for the same period in 2009. Operating earnings for the fourth quarter were impacted by approximately $7 million of property/casualty losses primarily due to an unusual hailstorm in Arizona. After tax net realized investment gains were $13,618,000 ($0.51 per diluted share) for the fourth quarter of 2010 as compared with the net realized gains of $4,841,000 ($0.18 per diluted share) for the fourth quarter of 2009.

Net income for the year ended Dec. 31, 2010 was $144,026,000 ($5.40 per diluted share) compared to net income of $15,625,000 ($0.59 per diluted share) for the year ended Dec. 31, 2009.

The increase in net income was due to improved operating income in the life, annuity and health segments, the company said, as well as a significant decrease in other-than-temporary impairments of investments in marketable securities.

After tax operating earnings for 2010, which exclude net realized investment gains and losses, were $95,985,000 ($3.60 per diluted share) compared with $64,828,000 ($2.44 per diluted share) for 2009. After tax net realized investment gains totaled $48,041,000 ($1.80 per diluted share) for 2010 compared with a net realized loss of $49,203,000 ($1.85 per diluted share) for 2009. The 2009 realized losses were primarily the result of $51,417,000 (after tax) in other-than-temporary impairments of investments in marketable securities.

 

Amerigroup Corp.

Amerigroup Corp. issued a statement announcing that net income for the fourth quarter of 2010 was $79.6 million, or $1.59 per diluted share, versus net income of $40.2 million, or $0.79 per diluted share, for the fourth quarter of 2009.  

For the year ended Dec. 31, 2010, Amerigroup 's net income was $273.4 million, or $5.40 per diluted share, versus net income of $149.3 million, or $2.85 per diluted share, for the full-year 2009.

"We are pleased with the quarter and gratified by the performance of our business.  We continue to help our members obtain the quality health care they need, while helping to save taxpayer dollars," James Carlson, Amerigroup's chairman and CEO, said in a statement. "We achieved moderate medical cost trends during the year, in part due to effective management by our clinical teams and also due to a more benign environment for medical cost inflation. We feel good about 2010 and are excited by the opportunities ahead."

Premium revenue for the fourth quarter of 2010 increased 10.3% to $1.5 billion compared to $1.4 billion in the fourth quarter of 2009. Sequentially, premium revenue increased $8.0 million, or 0.5%. The sequential increase primarily reflects the impact of rate increases in Georgia, Texas and Florida, partially offset by retroactive membership reductions and lower supplemental premium revenue associated with births.

Fourth quarter investment income and other revenues were $4.3 million versus $4.9 million in the fourth quarter of 2009, and compared to $5.0 million in the third quarter of 2010. The sequential decline was the result of lower rates of return on short-term fixed income securities.

For the full-year 2010, investment income and other revenues were $22.8 million versus $29.1 million in 2009.  

 

CNO Financial Group Inc.

CNO Financial Group Inc. announced results for the fourth quarter and the full year of 2010:

$98.2 million of income before net realized investment gains, corporate interest and taxes ("EBIT") (1), up 38% compared to $71.0 million in 4Q09

Net operating income (2) of $51.7 million, up 62% compared to $32.0 million in 4Q09

Net operating income per diluted share: 18 cents, compared to 15 cents in 4Q09

Net income increased to $168.2 million, compared to $18.2 million in 4Q09 (4Q10 included $116.5 million of net realized investment gains, decrease in valuation allowance for deferred tax assets and loss on extinguishment of debt; and 4Q09 included $(13.8) million of net realized investment losses, increase in valuation allowance for deferred tax assets and loss on extinguishment of debt)

Net income per diluted share of 56 cents, compared to 9 cents in 4Q09 (4Q10 included 38 cents of net realized investment gains, decrease in valuation allowance for deferred tax assets and loss on extinguishment of debt; and 4Q09 included (6) cents of net realized investment losses, increase in valuation allowance for deferred tax assets and loss on extinguishment or modification of debt)

Net income reflects a $95.0 million reduction to the valuation allowance for deferred taxes primarily resulting from the utilization of capital loss carryforwards in 2010 and consideration of our recent higher levels of operating income when

"CNO's fourth quarter results were strong, with net income increasing to $168 million from $18 million in the prior year, and net operating income increasing to $52 million (or 18 cents per share), compared to $32 million in the prior year," CEO Jim Prieur said in a statement. "We also were pleased that our core businesses continued to perform well, and key measures of financial strength, including our risk-based capital ratio and our debt-to-total capital ratio, also improved. Of note during the quarter, we were able to release $95 million of our tax valuation reserve, given our improved financial performance in recent years. "

 

CNP Assurances

CNP Assurances, the leading personal insurer in France, with operations in the rest of Europe and in South America, has announced its 2010 premium income and results.

In 2010, premium income dipped just 0.8% to EUR32.3 billion. This strong performance was achieved on the back of robust 15.1% growth in 2009.

Sales were led by unit-linked products, a vibrant risk segment - with particularly strong demand for personal risk and loan insurance cover in France - and a sharp 30.2% increase in premium income in Brazil (up 7.8% excluding the currency effect). In Italy, premium income fell by 24.9% in 2010, after virtually tripling in the prior year.

"In a record-low interest rate environment, our value creation strategy for 2010 consisted of developing sales of risk products both in France and in international markets,” Gilles Benoist, CEO, said in a statement. “This strategy led to solid bottom-line growth and increased balance sheet flexibility. In 2011, with the continued support of all of our partners, we will pursue our expansion in high-margin segments."

 

EMC Insurance Group Inc.

EMC Insurance Group Inc. reported operating income of $0.71 per share for the fourth quarter ended Dec. 31, 2010, compared to operating income of $0.98 per share for the fourth quarter of 2009 in a recent statement. Operating income for the year ended Dec. 31, 2010 was $2.21 per share, compared to $2.55 per share in 2009.

Net income, including realized investment gains and losses, totaled $10,711,000 ($0.83 per share) for the fourth quarter of 2010 compared to $27,549,000 ($2.10 per share) for the fourth quarter of 2009. Net income for the year ended Dec. 31, 2010 was $31,346,000 ($2.40 per share), compared to a net income of $45,371,000 ($3.44 per share) in 2009.

“Net income for 2009 includes $14,608,000 ($1.11 per share) of net realized investment gain resulting from the sale of the company’s common stock investment in Verisk Analytics Inc.,” Bruce Kelley, president and CEO said in a statement. “Excluding this one-time transaction, net income for 2010 was comparable to 2009.

“Operating results continue to meet our expectations,” Kelley added. “Pricing remains competitive in the commercial lines of business, but we continue to see modest pricing improvements in the personal lines of business. Due to the mild 2009 and 2010 hurricane seasons and a recovery in the reinsurance industry’s capital level, premium rate levels in the reinsurance segment were generally flat in 2010,” continued Kelley. “However, premiums earned for the reinsurance segment were up 9.9% in 2010 due to the addition of new facility business, as well as new property business in central and eastern Europe.”

Premiums earned increased 4.4% to $103,062,000 for the fourth quarter of 2010, from $98,726,000 for the fourth quarter of 2009. Premiums earned for the year ended Dec. 31, 2010 increased 1.3% to $389,122,000 from $384,011,000 in 2009.

 

Employers Holdings Inc.

In a statement, Employers Holdings Inc. reported fourth quarter net income of $20.1 million or $0.51 per diluted share compared with $11.3 million or $0.26 per diluted share in the fourth quarter of 2009, an increase of $8.9 million in net income or $0.25 per share.

Net income in the fourth quarter of 2010 was driven largely by expense reductions, realized gains from equity sales in the quarter and increased written premium. Written premium was impacted by a $2.8 million favorable adjustment in the final audit accrual rate in the fourth quarter of 2010 relative to the fourth quarter of 2009 and a $1.6 million reinsurance reinstatement premium paid that lowered written premium in the fourth quarter of 2009. In force premium of $321.1 million at Dec. 31, 2010 declined $63.9 million or 16.6% relative to year-end 2009 and just 2.2% since September 30, 2010.

Net income for the full year of 2010 was $62.8 million or $1.51 per diluted share compared with $83.0 million or $1.80 per diluted share for the full year 2009.  Net income before the impact of the LPT deferred reinsurance gain was $44.6 million or $1.07 per diluted share in 2010 compared with $65.0 million or $1.41 per diluted share in 2009.

At Dec. 31, 2010, the company's year over year change in net rate was -5% compared with -7% in 2009 while the company's year over year change in total payroll exposure was -12% compared with -11% in 2009.

The fourth quarter 2010 combined ratio was 107.6% (113.3% before the impact of the LPT deferred reinsurance gain), compared with 106.5% (111.7% before the impact of the LPT deferred reinsurance gain) for the fourth quarter of 2009, an increase of 1.1 percentage points in the GAAP combined ratio. For the full year of 2010, the combined ratio was 106.8% (112.4% before the impact of the LPT deferred reinsurance gain), an increase of 8.8 percentage points from 98.0% (102.5% before the impact of the LPT deferred reinsurance gain) for the same period in 2009.

"Reflecting on this past year, we are pleased that our growth initiatives, implemented in late July, are beginning to yield results,” President and CEO Douglas Dirks said in a statement.

 

Erie Indemnity Co.

In a recent statement, Erie Indemnity Co. announced fourth quarter 2010 earnings of $12 million, compared to earnings of $24 million in the fourth quarter of 2009. Operating income decreased to $17 million in the fourth quarter of 2010 from $22 million for the same period one year ago. Also, the sale of Indemnity’s wholly owned property and casualty insurance subsidiaries to the Erie Insurance Exchange was completed on Dec. 31, 2010.

The management fee rate was 25% for both 2010 and 2009. Direct written premiums of the property/casualty insurance operations, upon which the management fee is calculated, increased 5.7% in the fourth quarter of 2010, due to a 3.3% increase in policies in force and modest increases in average premium. The year-over-year average premium per policy for all lines of business increased 1.1% at Dec. 31, 2010, compared to a decrease of 1.9% at Dec. 31, 2009.

The cost of management operations increased to $215 million in the fourth quarter 2010 from $198 million in the fourth quarter of 2009. Fourth quarter 2010 commissions increased $5 million compared to the same period a year ago. Fourth quarter 2010 non-commission expense included an increase in personnel costs of $8 million and an increase in all other operating costs of $4 million primarily related to our technology initiatives.

The current accident year loss and loss expense ratio, excluding catastrophe losses, was 72.1% in the fourth quarter of 2010, compared to 68.4% in the fourth quarter of 2009.

Catastrophe losses contributed 4.4 points and 1.9 points to the combined ratio in the fourth quarters of 2010 and 2009, respectively.

 

Massachusetts Mutual Life Insurance Co.

Massachusetts Mutual Life Insurance Co. announced, in a statement, its consolidated statutory financial results for 2010, including strong increases in earnings and surplus, as well as assets under management for the company and its subsidiaries. The company also achieved record sales in its core product, whole life insurance—the fifth consecutive year of record sales—as well as record sales in its retirement services business for the second consecutive year. The results underscore the company's success in working toward its mission to be the leading mutual life insurance company based on financial security, high dividends to participating policyholders and quality service.

For the year ended Dec. 31, 2010, net gain from operations before dividends and taxes—the company's primary earnings measure as a mutual company—grew to $1.9 billion, up 3% from the prior year, while net income grew to $594 million, up significantly from a net loss of $283 million for 2009. Weighted sales for whole life insurance were $237 million for 2010, up 17% over 2009, and retirement plan sales from its Retirement Services business totaled $5.3 billion, up 11%. Assets under management by MassMutual and its subsidiaries grew to $448 billion as of Dec. 31, 2010, up 10% from the end of 2009. The company's surplus and total adjusted capital—both key indicators of the company's overall financial strength—grew to record levels of $10.4 billion (up 12%) and $12.4 billion (up 13%), respectively.

"Against the background of a slow and uncertain economic recovery, MassMutual produced excellent results last year, including records in some key areas," Roger Crandall, chairman, president and CEO, said in a statement. "Our ability to focus on long-term financial strength rather than short-term market pressures enabled us to again deliver profitable sales of our core products, continue to build our capital and surplus, and offer quality financial solutions through one of the best career agency systems in the industry.

"Our 2010 performance points to how appealing mutuality—and the value of a company that puts its policyholders first—has become," Crandall continued. "As we celebrate our 160th anniversary this year, we are in an excellent financial and competitive position. With our enduring financial strength, mutual structure that focuses on our policyholders, quality products and services that help meet a lifetime of financial needs, and dedicated employees and financial professionals who stand ready to serve our customers, we have great momentum as we begin 2011."

 

Pan-American Life Insurance Group

Pan-American Life Insurance Group announced financial results for the full year ending Dec. 31, 2010.

"The results that Pan-American Life Insurance Group delivered in 2010 demonstrate that our focused strategy is producing sizable dividends,” Jose Suquet, chairman of the board, president and CEO said in a statement. “This is a testament to our commitment to serving the life and health insurance needs of consumers in Latin America and the U.S. Hispanic market, as well as to the leadership of our experienced executive team. Additionally, an enhanced product offering and our continued investment in operations and technology enabled us to increase efficiencies and be more competitive in the marketplace."

According to the statement, revenues grew 9.5% to $455 million, while pre-tax operating earnings increased 16% to $30.8 million. Additionally, net income amounted to $34.1 million, a 19% gain, reflecting the continued strong performance of the company's investment portfolio. Total assets stand at $2.2 billion and GAAP equity grew 11 percent to $521 million.

"Our balance sheet is now even stronger than before the global financial crisis," added Suquet. "The company's performance was validated midyear, when ratings agency A.M. Best upgraded the financial strength rating to A (Excellent) from A- (Excellent) of lead Group member Pan-American Life Insurance Co. and its affiliates."

 

ProAssurance Corp. 

ProAssurance Corp. released a statement regarding its Q4 and 2010 earnings. The company’s full year 2010 operating income was $219.5 million or $6.82 per diluted share and its net income was $231.6 million or $7.20 per diluted share. Operating income for the fourth quarter was $96.1 million or $3.08 per diluted share and net income for the fourth quarter was $102.1 million or $3.28 per diluted share.

Gross written premium was $533 million for the year and $119 million for the quarter ended Dec. 31, 2010. This compares to $554 million and $119 million for the respective prior year periods. The effect of writing two-year policies accounted for approximately $16 million of the year-over-year decline. Premiums from two-year policies are recorded as written at inception, but are earned on a pro-rata basis over the full policy term, thus attention to net premiums earned ($519 million in 2010 vs. $498 million in 2009) may provide a better indication of ongoing premium income trends. One-time changes due to redistribution of policy renewal dates accounted for $6.5 million of the decline.

"Our success in 2010 is a direct result of our disciplined attention to every aspect of our operations, from claims defense to underwriting and pricing. We continue to demonstrate our ability to build long-term strength for our policyholders and enhance value for shareholders throughout all phases of the insurance cycle," said W. Stancil Starnes, the chairman and CEO. He added, "We believe our strong financial results and our proven ability to execute strategic transactions such as the American Physicians Services Group acquisition, demonstrate that ProAssurance is uniquely qualified to succeed in today's environment, while responding to new challenges in the rapidly evolving world of health care."

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