Profit at Allianz Life Insurance Co. of North America jumped 37 percent to $586 million for 2012 — but not on annuity sales.
Sales of the company's popular investment vehicles continue falling as ultra-low interest rates rock the life and annuity industries.
Golden Valley-based Allianz Life, a unit of German insurance giant Allianz, said Thursday that growth in operating profits was mainly driven by its growing asset base, as well as trimming benefits paid to customers, the one-time sale of bonds and other securities and managing expenses. Assets under management grew 8 percent to $102.9 billion.
Total premiums for Allianz Life's products dropped 14 percent from 2011 to $9.4 billion, with the decline deepening in recent quarters.
Variable annuities fell 12 percent to $3.3 billion. Fixed annuities, mostly fixed index annuities that are Allianz Life's bread and butter, fell 16 percent to $5.5 billion. The company's traditional life insurance business rose 75 percent to $65 million.
Annuities are a retirement savings product in which consumers pay a lump sum in exchange for regular payments through the contract or until the person dies.
Like other annuity players, Allianz Life is sacrificing sales for profits, said Judith Alexander, director of sales and marketing at Beacon Research, an independent annuity research firm in Evanston, Ill.
Allianz Life's top-selling indexed annuity, the MasterDex X, continues to do well but has fallen from its No. 1 spot. "Their sales have declined largely because other products out there are offering more generous terms," Alexander said.
