Ameriprise Continues to Adjust Life and Annuity Products for Low Rates
What You Need to Know
In the fourth quarter of 2021, companywide net income and revenue soared.
Retirement & Protection operating earnings increased 2%.
The CFO says the possibility that rates could rise has people thinking more about insurance deals.
Executives at Ameriprise Financial are hoping the Federal Reserve will move forward with pushing interest rates higher soon, but they are going to shape the company’s life insurance and annuity products to reflect the current low-rate environment.
Walter Berman, the Minneapolis-based financial services company’s chief financial officer, said the idea of a rate increase has would-be buyers looking at what could happen to the performance of blocks of insurance business, and especially at what could happen to the performance of long-term care insurance blocks.
“Certainly, that’s a lot of people’s thinking,” Berman said.
But Berman and Jim Cracchiolo, Ameriprise’s CEO, emphasized that, at this point, the company is responding to the very low interest rates now available on bonds and other fixed-income investments by cutting benefits guarantees out of life and annuity products.
What Your Peers Are Reading
Ameriprise eliminated three of the four living benefits guarantee riders that had been available with its variable annuities Jan. 1, Cracchiolo said.
“These three riders represented 98% of our living benefit sales for the past year,” he said. “And, by the end of the second quarter of 2022, we will have stopped all new sales of our one remaining rider, which represents a very, very small part of our business.”
On the insurance side, Cracchiolo said, Ameriprise is making similar types of moves: The company has discontinued sales of universal life with secondary guarantees and sales of universal life products that offer long-term care benefits.
The executives talked about the effects of interest rates on life, annuity and LTCI products, and insurance deals, today, during a conference call the company held to go over results for the fourth quarter of 2021 with securities analysts. The quarter ended Dec. 31. The company has posted a recording of the earnings call, and other earnings-related materials, on the investor relations section of its website.
What It Means
Ameriprise is the first publicly traded life, health and annuity issuer to post fourth-quarter earnings.
For agents, brokers and planners who help people with annuities and income planning, the executives’ comments mean that, for now, while insurers wait to see if the Federal Reserve does what it can to get interest rates up off the floor, any life and annuity product guarantees that are still available are precious.
