Operating profits at Allianz Life Insurance Co. of North America dropped 38 percent in the first quarter compared with a year ago, when the company booked big gains on the sale of appreciated bonds.

Minus last year's gain on bond sales, Allianz Life's profits would have been down a bit from a year ago, the company said Wednesday, because of modest losses in normal hedging activities.

Total premiums, or sales, of $2.1 billion were down 22 percent from a year ago, although they rose 3 percent from the previous quarter.

The Golden Valley-based company remains the country's No. 1 seller of fixed annuities, but the extended low interest rate environment has been punishing the annuity industry. Nationally, sales of fixed annuities continue declining.

Fixed index annuities, which are Allianz Life's claim to fame, have generally fared better because they typically offer a feature for guaranteed income in retirement and the potential for gains based on the performance of equities.

Annuities are insurance products often used for retirement that pay out a regular stream of income payments. Fixed annuities offer a guaranteed payout; variable annuities are higher risk and pay out based on the performance of underlying investments.

Marc Olson, vice president of finance, said in an interview that the company's sales losses are stabilizing across the board.

"Even though there's a large decline from the first quarter of last year, we've seen stable sales for the last three quarters and we've also seen improving profit margin on those sales," Olson said. "We're at a point where we expect sales to sequentially be stable."

The company's assets under management grew 6 percent from a year ago to $104.5 billion, the main driver being the improved gains in equities.

Olson said Allianz Life's fixed index sales are shifting away from the once-dominant MasterDex X to three new fixed index products it has developed, one of which is geared to younger people: Allianz 360, Allianz 365i and Allianz Life 222.

Jennifer Bjorhus • 612-673-4683