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Updated Wednesday, February 6, 2013 at 11:18 AM

Symetra shares fall on profit shortfall

By Drew DeSilver
Seattle Times business reporter

Shares of Bellevue-based Symetra Financial slumped Tuesday, a day after the insurance and investment company reported disappointing fourth-quarter financial results.

Several new insurance and annuity products missed their sales targets last year, Symetra said, and claims in its specialized life- and medical-insurance businesses were higher than expected in the final three months of 2012.

“We accomplished a lot last year, but we also had some big misses,” chief executive Thomas Marra said in a teleconference with analysts. “Organic growth has been more elusive than we planned for and expected.”

Symetra earned $31 million, or 22 cents per share, in the fourth quarter. Wall Street analysts had on average expected the company to earn 32.3 cents.

For the full year, Symetra made a profit of $205.4 million, or $1.49 per share, on $2.1 billion in total revenue. That represented a 5.1 percent increase in revenue and a 4.9 increase in net profit.

But traders were more concerned by the fourth-quarter shortfall and indications that some of Symetra’s new products were having trouble getting traction. They sent the shares down 97 cents, or 7.1 percent, to close at $12.70.

Symetra, which sells a range of annuities, medical insurance and life insurance, spent much time, effort and money in 2012 building new business lines, under the rubric “Grow & Diversify.”

But so far, as Marra and other senior executives have acknowledged, the “diversify” part has come a lot easier than the “grow” part.

“Frankly, we have gotten ahead of our revenues,” chief financial officer Margaret Meister said on the conference call, pledging to hold operating expenses flat this year.

The company’s new group life and disability insurance, universal life insurance and nonliving benefits variable annuity businesses all fell short of their sales goals last year. And sales of deferred fixed annuities, Symetra’s single biggest product line, fell by more than half as continued low interest rates made them less appealing.

One bright spot for Symetra was the “Edge Pro” fixed indexed annuity, introduced nearly two years ago. The company sold $292.6 million of the annuity, versus $45.3 million in 2011.

The company said it expects adjusted operating earnings per share, a nonstandard metric that excludes some investment results, to come in between $1.30 and $1.50 this year, compared with $1.34 per share last year.

Marra told analysts Symetra had looked “long and hard” at several potential acquisitions last year, but ultimately walked away because they were too expensive.

But, he added, “we’re very interested in doing a deal at the right price,” especially in the individual life-insurance and employee-benefits areas.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com


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