Strong investment returns and improved sales of life insurance policies helped Newport Beach’s Pacific Life Insurance Co. grow profits and assets in 2010.
Pacific Life posted a $741 million profit for 2010, up 13.7% from a year earlier, according to initial financial results posted on the company’s website.
The initial results only reflect the company’s insurance business. Pacific Life expects to report final audited results for all operations next month.
Assets topped $98.7 billion, up 4.2% from a year earlier.
Pacific Life and its sister companies offer life insurance policies, investments and jet leases.
The company generates more than $5 billion annually in revenue, mostly from life insurance premiums and annuities.
Pacific Life is the second largest privately held company here after Fountain Valley-based Kingston Technology Co. (see story, page 1).
The insurer’s policies and other liabilities were $92.4 billion as of Dec. 31, up from $89.7 billion a year earlier.
The preliminary results seem to indicate that Pacific Life has turned the corner after an industrywide downturn in 2008 and the near collapse of American Interna- tional Group Inc., which cast a pall over all insurers.
During the financial crisis, “We scaled back our growth and wanted to preserve capital,” Pacific Life Chief Financial Officer Khanh Tran said in an earlier interview with the Business Journal.
2010 was a good year for Pacific Life and its rivals, said Wayne Dalton, an analyst at Charlottesville, Va.-based SNL Financial. Insurers benefited from a surging stock market and uptick in revenue from policies, he said.
“You really couldn’t go wrong with anything you invested in,” Dalton said. “That really helped companies with capital and a surplus position.”
The Dow Jones Industrial Average gained 11% in 2010, while Nasdaq gained nearly 17%. Standard & Poor’s 500 was up 12.8% for the year.
The run boosted Pacific Life’s investment income to about $1.7 billion, up from $674 million a year earlier.
The company finished the year with $5.8 billion in capital, up 17% from a year earlier.
Challenges
• Business: life insurance, investments
• Headquarters: Newport Beach
• 2010 Assets: $98.7 billion, up 4.2%
• 2010 profits: $742 million, up 13.7%
• Local Employees: About 1,900
Many business lines at Pacific Life are performing well, according to Dalton. But the company still faces challenges.
Pacific Life had been a big underwriter for variable annuities leading into the recession. Its position among top providers took a hit when price cuts became standard industrywide, according to Dalton.
“They no longer had the edge,” he said.
Variable annuities allow investors to create their own mix of stock and bond funds with deferred capital gains.
Pacific Life works with more than 900 regional and national brokerages and financial institutions that receive a commission for selling its policies and investments.
The company employs 800 people in its life insurance division, which is based in Aliso Viejo.
In all, Pacific Life employs 1,900 people in the county.
Restructuring
Pacific Life is reworking its support network for its life insurance division to focus more on sales and generating business.
It created six new segments, dubbed divisional sales organizations.
These newly established back-office hubs—in Newport Beach, Seattle, Minneapolis, Atlanta, New York and Chicago—serve 27 regional offices that cater to investment managers, advisers and brokers who sell Pacific Life policies.
Officials hope the realignment will free up more time for regional office executives to work with insurance brokers who sell Pacific Life policies to individuals, small businesses and corporations.
