NEW YORK (Reuters) – U.S. insurer Lincoln National Corp could deliver shareholder returns of 20 percent or more in the coming year, as the market for the company’s main product, variable annuities, recovers, Barron’s reported.
Demand for variable annuities, a form of insurance giving policyholders a steady income stream, may bounce back as stock market volatility returns, the financial publication reported.
Variable annuities, which make up about 45 percent of Lincoln’s earnings, can offer protection against stock market gyrations.
Sales of variable annuities fell by about 41 percent to $91 billion last year from 2011, Barron’s reported. But, Lincoln’s shareholders nearly doubled their money over the past five years, beating the stock market at large.
Lincoln’s stock still remains cheap compared to the rest of the market, Barron’s said.
The biggest player in variable annuities is Jackson National, part of Prudential Plc. After nonprofit TIAA, Lincoln is the third largest in variable annuity sales, according to the publication.
The company has been selling more variable annuities for the past three quarters, according to Barron’s, and Lincoln is anticipated to gain market share as the industry lifts.
Lincoln has seen its earnings rise recently because it lowered its costs and the rising stock market increased fees on the assets it manages, the publication said.
Reporting by Jessica DiNapoli; Editing by Will Dunham