Consumers are apparently investing in variable annuities again, and sales of the product, which were slow last year, were a highlight of MetLife Inc.’s first-quarter earnings report.
New deposits rose 51% from a year earlier, to a record $3.8 billion, MetLife said last week. However, sales of universal life products fell 13% during the quarter, because of increasingly competitive pricing.
Some universal life policy pricing has become irrational, Lisa M. Weber, MetLife’s president of individual business, said Friday during the New York company’s earnings conference call.
“There are underwriting decisions that are really puzzling to us,” Ms. Weber said. The pricing environment has led the company to consider changing some of its life policy terms, such as those concerning foreign travel, she said.
Universal life insurance policies, which combine life insurance with cash value accumulation, are part of MetLife’s life insurance sales.
“We will only do business that is profitable and appropriate,” Ms. Weber said.
Andrew Kligerman, an analyst at UBS Securities, said the drop in MetLife’s universal life sales was “sharper than expected” and “likely due to new Travelers underwriting guidelines and crackdowns on investor-owned life insurance sales.” MetLife acquired Travelers Life and Annuity from Citigroup Inc. in July.
MetLife reported that first-quarter net income available to common shareholders dropped 28% from a year earlier, to $714 million, or 93 cents a share, primarily as a result of changes it made in its investment portfolio to take advantage of rising interest rates.
Net income before preferred stock dividends fell 24.3%, to $747 million.
Operating earnings available to common shareholders rose 25%, to a record $1.02 billion. That figure excludes the effects of investments.
The average estimate of analysts had called for earnings of $1.09 a share.
