As interest rates continue to fall, Ameriprise Financial Inc. is answering with more emphasis on annuity sales without return guarantees. According to a recent article from ThinkAdvisor, executives from Ameriprise, which is based out of Minneapolis, held a conference call with securities analysts yesterday to discuss the annuity product strategy.
The Ameriprise chief executive officer, James Cracchiolo, said during the call that the company’s annuity books of business generate significant, consistent free cash flow. He added that while the fixed annuity sales were down, year-over-year, that was by design. Meanwhile, sales of variable annuities were up.
The new strategy also includes the launch of a structured annuity. The new product does not provide an income guarantee, but it does give the contract holder some protection against poor investment index performance.
“We expect this will help shift even more of our books away from products with guarantees,” Cracciolo said.
The company’s chief financial officer, Walter Berman, stated that the company is shifting away from emphasizing living benefits features, and that the company’s exposure to variable annuity risk continues to be among the lowest in the industry.
Fourth quarter sales in 2019 were recently released, and Ameriprise is reporting $463 million in net income on $3.3 billion in revenue. Sales are down when compared to the same time period in 2018, when the company reported $539 million in net income on $3.2 billion in revenue.
Written by Rachel Summit