A number of insurers have begun to release their financial results for Q1 2011. The following is a compilation of their announcements:
AEGON N.V. issued a statement to disclose its first-quarter results:
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"We made solid progress on AEGON's strategic objectives during the quarter, which include the repurchase of EUR 750 million of core capital securities from the Dutch State in March," said CEO Alex Wynaendts. "The recently announced divestment of AEGON's life reinsurance business further supports our aim to complete the repurchase of all remaining securities by the end of June. With these key achievements - along with the other actions we have taken in recent years to optimize our portfolio of businesses—we have established a new basis from which to pursue AEGON's ambitions.
"During the first quarter, AEGON's businesses in the United States continued to show strong results, both in terms of earnings as well as sales," he continued. "The strong sales of pensions and variable annuities clearly support our strategic shift to more fee-generating business. In the Netherlands, we have been observing a strong increase in life expectancy and are taking a prudent approach by now increasing our provisioning which will have an impact on the earnings of our Dutch business going forward. In the United Kingdom, we are confident that our new CEO and management team will fully deliver on our plans."
"We were particularly pleased by the strong new life sales achieved by AEGON's newer businesses in Central & Eastern Europe and Asia," he added. "Over time, these key growth regions, in addition to Latin America, will enable us to achieve a broader geographical balance given the substantial opportunity they present."
Jackson National Life Insurance Co. issued a statement reporting generated total sales and deposits of $5.7 billion during the first quarter of 2011, up 31% from the same period in the prior year and 5% over the fourth quarter of 2010.
“Jackson has benefited from a flight to quality in the retirement services industry due to our focus on sustainable growth,” said Mike Wells, Jackson’s president and CEO. "The long-term, disciplined approach we take in balancing new sales opportunities with corporate profitability is a primary contributor to Jackson’s financial stability, which has established the company as a reliable business partner among advisers and their clients."
Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc, recorded annuity net flows (total premium minus surrenders, death benefits and annuitizations) of $3.1 billion in the first quarter of 2011, 35% higher than the same period in 2010, due primarily to the increase in sales and continued low levels of surrender activity.
During full-year 2010, Jackson ranked third in total annuity sales with a market share of 8.0%, up from fourth and a market share of 5.8% in full-year 2009. The company’s sales volume continues to benefit from the nearly 18% increase in the number of licensed agents and registered representatives achieved from March 31, 2010 to March 31 2011.
Customer demand for fee-based products was strong during the first quarter of 2011 due to positive equity market performance and the low-interest rate environment. Sales of variable annuities (VAs) were nearly $4.6 billion, 45 percent higher than the first quarter of 2010 and 9 percent higher than the fourth quarter of 2010.
During full-year 2010, Jackson ranked third in new variable annuity sales with a market share of 10.7%, up from fourth and a market share of 8.1% in full-year 2009. Jackson also ranked second in variable annuity net flow during full-year 2010, according to reporting by SimFund VA. For the eighth consecutive year (2003-2010), Jackson's Perspective II was the top-selling VA contract in the independent channel.
As Jackson continues to direct available capital to support higher-margin VA sales, the company restrained fixed and fixed index annuity sales during the first quarter of 2011. Sales of fixed index annuities were nearly $326 million, compared to nearly $473 million in the first quarter of 2010, while traditional deferred fixed annuity sales totaled $201 million, compared to nearly $283 million during the same period of the prior year. During full-year 2010, Jackson ranked sixth in fixed index annuity sales with a market share of 5.2%, compared to fourth and a market share of 7.5% in full-year 2009, and eighth in traditional deferred fixed annuity sales with a market share of 3.5%, up from 13th and a market share of 2.2% in full-year 2009.
Owing to exceptionally high costs for natural catastrophes, Munich Re reported in a thatement that it posted a consolidated loss of €948m for the first quarter of 2011 (previous year: profit of €485m). Despite this quarterly loss, Munich Re still expects to record a profit for the current financial year.
“The earthquake in Japan and the natural catastrophes in Australia and New Zealand have made this the most difficult start to a financial year we have experienced for a long time," said CFO Jörg Schneider. "Such major losses – even several within a few weeks – are possible in our reinsurance business. Thanks to our solid capitalisation, we are able to absorb them. Despite these devastating natural catastrophes, we can still achieve a profit for the year as a whole.” With regard to the positive effects expected by Munich Re for the reinsurance markets, Schneider added: “Owing to our financial strength, we can exploit the additional opportunities that now present themselves and participate in the positive market development.”
Summary of the figures for the first three months:
For the period January to March, the Group had to cope with losses in reinsurance of €2.7bn from natural catastrophes (after retrocession and adjusted for the impact from the transfer of insurance risks to the capital markets and before tax). That is – before tax – almost €2.5bn more than was to be expected for a single quarter (after tax, it is €1.8bn more).
These high costs led to a pre-tax operating loss of €1,384m (previous year: profit of €770m). Compared with year-end 2010, equity fell by 11.0% to €20.5bn, which was also partly due to the rise in interest rates, a relatively strong euro, and share buy-backs. The annualised return on risk-adjusted capital (RORAC) amounted to –18.5% and the return on equity (RoE) to –17.4%. Gross premiums written increased by 11.3% to €13.0bn (11.7bn). If exchange rates had remained the same, premium volume would have increased by 8.7% compared with the same period last year.
As part of its active capital management, Munich Re bought back a nominal amount of €1.2bn of the subordinated bond 2003/2023, out of a total outstanding amount of €2.9bn. Besides this, Munich Re issued a new subordinated bond with a volume of €1bn on 29 March 2011. This bond, which has a term of 30 years, is first callable after ten years. It has a fixed coupon rate of 6% p.a. up to then and a floating rate thereafter. The bond is designed to be compliant with the existing (Solvency I) and anticipated future (Solvency II) supervisory regime, and to meet current rating agency requirements.
Primary insurance: Result of €56m
The operating result for the first three months of 2011 was €173m (251m). Before elimination of intra-Group transactions, the consolidated result amounted to €56m (165m), the year-on-year reduction being chiefly attributable to the lower investment result and burdens from international business. Thus in the primary insurance segment, write-downs of €34m were made on the goodwill and other assets of ERGO Daum Direct in South Korea. The ERGO Insurance Group's consolidated result amounted to €15m (78m).
ERGO CEO Torsten Oletzky stressed: “We are adhering to our profit guidance of €450–550m for the year as a whole. We will make headway in international business in 2011, and our investment result should also improve in the further course of the year.” After negative special factors in the first quarter, ERGO is expecting positive one-off effects from the already transacted sale of a group company in Singapore.
Overall premium income across all lines of business increased by 1.4% to €4.8bn (4.7bn) from January to March, with especially prominent growth in international business and German health insurance. The fact that total premium income was down slightly by 1.1% is mainly due to lower single premiums from capitalisation products and unit-linked life insurance.
Accordingly, overall premium income in the life segment fell by 8.5% since January, with reductions both in Germany and in international business. As ERGO was able to increase its new regular premium income by 12.9%, new business measured in terms of APE (annual premium equivalent = regular premium income plus 10% of single-premium volume) totalled €178m (177m), a slight year-on-year increase of 0.5%.
In the health primary insurance segment, ERGO achieved growth of 3.0% in premium income to €1.5bn (1.4bn). There was expansion in new business, especially in comprehensive cover, following the abolition in Germany from the beginning of 2011 of the three-year waiting period introduced in 2007 for switching to private insurance.
In the property/casualty segment, ERGO increased its premium income to €1.8bn (1.7bn). Commercial and industrial insurance was mainly responsible for the growth of 2.2% to €1.19bn (1.16bn) in German business, while international business grew at a faster pace. The combined ratio for all German and international property-casualty business amounted to 98.2% (98.7%) for the first quarter.
Nationwide issued a statement reporting that it reported a 10% increase in net operating income for the first quarter of 2011, compared to the same period in 2010. Net operating income of $476 million through March 31, 2011 was driven by lower claims in the company’s property/casualty business combined with continued asset growth in the financial service business and improved investment performance overall.
Total operating revenue in the quarter was $5.2 billion. Net income in the first quarter of 2011 was $512 million, up 29 percent from the same period in 2010. Results included $2.7 billion in property/casualty claims, life insurance benefits, credited interest, and other accident and health benefits paid to policyholders.
“We’re optimistic about our potential growth trajectory based on the first quarter performance combined with signs of an economic recovery that gained some traction,” said CEO Steve Rasmussen. “Our disciplined focus to deliver exceptional value for our members and business partners through great products and service is proving highly effective. We have the right products, the right people and the right partners in place for a highly successful year. At the same time, we have to be realistic about the impact of weather-related claims on our overall results as the year plays out.”
Net operating income for the property/casualty businesses was up 17% to $338 million in the first quarter, compared to the first quarter of 2010. Results were bolstered by lower claims and better investment results. Non-weather-related claims continue to trend lower, reflecting the positive impact of underwriting and risk management initiatives. Lower-than-expected payments on prior-year claims also benefited first quarter results. Direct written premiums were flat overall at $3.6 billion, as new business writings were up from a year ago across most major product lines, and overall retention continued to improve. Premiums from direct and affinity channels were also up significantly, growing more than 15% combined.
Net investment income was $849 million for the quarter, compared to $790 million in the same period of 2010.
This increase was driven by higher income from fixed maturity securities and better performance from alternative investments. The continued improvement in credit markets also resulted in lower investment impairments.
At March 31, 2011, general account investments topped $66.6 billion, up from $66.1 billion at Dec. 31, 2010. Nationwide ended the first quarter with total assets of $151.6 billion, up from $148.7 billion at the end of 2010. Policyholder equity increased to $17.4 billion, up from $16.8 billion at the end of 2010.
National Western Life Insurance Co. issued a statement reporting first quarter 2011 consolidated net earnings of $18.2 million, or $5.15 per diluted Class A common share, compared with consolidated net earnings of $18.4 million, or $5.20 per diluted Class A common share, for the first quarter of 2010. The company's book value per share increased to $340.26 from $335.83 at Dec. 31, 2010.
Revenues for the quarter ended March 31, 2011 increased 25% to $180.4 million from the level achieved in the first quarter of 2010 driven primarily by improved investment results. Realized gains on investments, before taxes, were $3.1 million in the first quarter of 2011 compared to realized losses on investments of $0.4 million in the quarter ended March 31, 2010. The fair value of index options purchased to hedge the contractual obligation associated with the company's fixed-index products increased by nearly $20 million for the same periods.
"Coming off of a year in which we attained record annuity sales, we are pleased to see that that business levels continue to advance thus far in 2011," said President Ross R. Moody. "First quarter annuity sales were up 26% over last year and life insurance sales were roughly 14% ahead of the pace in the first quarter of 2010."
Moody also observed that the strong revenue growth helped to offset the effect of increased taxes and expenses during the 2011 first quarter. "Although pretax earnings were up $0.6 million in the first quarter this year, a 2% increase in our effective tax rate caused net earnings to be relatively flat. We also did some strengthening in the expense area increasing amortization of our deferred acquisition costs by approximately $3.7 million in the current quarter compared to last year."
Sino Assurance Inc.
Sino Assurance Inc., in a statement, reported solid first quarter 2011 financial results highlighted by strong earnings growth, an increase of 85% in net revenue and 180% in net income attributable with 90% gross margin.
Net revenue
Net revenue for the three months ended March 31, 2011, was $3,496,915 as compared to $1,894,270 for the same period in 2010. The increase of $1,602,645 or approximately 85% was due to significant year-over-year growth of our customer base in the tender and surety guarantee business and market share in China. The gross margin increased to 90% from 82% for the three months ended March 31, 2011, due to tightening of control of our cost of sales. As a result, the cost of sales decrease for the period and the percentage of the guarantee fee income substantially increased.
Net income before tax
Net income before tax for the three months ended March 31, 2011 was $2,157,647 compared to $765,942 for the same period in 2010, an increase in pre-tax income of $1,391,705, or approximately 182%. The increase in pre-tax net income was a result of the fact that we tightened control of our selling, general and administrative expenses during the period, and also employed more agents to promote our guarantee business which resulted in an increase in guarantee fee income from bank referrals.
Net income
Net income for the three months ended March 31, 2011 was $1,636,888 compared to $584,903 for the same period in 2010, an increase in net income of $1,051,985, or approximately 180%. GAAP earnings per diluted share for the first quarter of 2011 were $0.03, as compared to $0.01 for the first quarter of 2010.
Operating expenses
Total operating expenses were $1,001,997 for the three months ended March 31, 2011, as compared to $782,427 for the same period in 2010. The increase of $219,570 or 28% was primarily due to the increase in staff costs, provision for guarantee losses, rent and rate, audit fee and other professional fee.
Financial Outlook
Management believes that the opportunities for sustained growth in revenue and earnings will be largely associated with the customer demand for the financial services provided by the company, which primarily take the form of credit guaranty. Other elements expected to drive the growth in revenue include the potential impact of the regulatory governance of the credit guaranty market and development of the company's new personal credit products and services.
Management believes that for the year 2011, the company will generate earning per share $0.16 to $0.17, with revenue projection of $23 to $24 million.
