About 13,000 contract holders, or one-quarter of contract holders who received the offers, surrendered their contracts, and that helped reduce Voya’s exposure to annuity guarantee risk by about $300 million, Smith said.

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“It was a meaningful reduction in the net amount of risk,” Smith said. “We are very pleased with the take-up rate, and we look forward to seeing what other opportunities we can take.”

Voya held the conference call to talk about its first-quarter earnings.

The company reported a $143 million net loss for the first quarter on $2.2 billion in revenue, compared with $192 million in income on $3 billion in revenue for the first quarter of 2016.

Closed Block Variable Annuity Unit

Years ago, when interest rates were higher, Voya wrote retail variable annuities with high guaranteed minimum income benefits. In 2009, the company stopped selling retail variable annuity products with substantial guarantees. The company put the high-guarantee contracts it had written in run-off mode, in the closed block variable annuity unit.

Voya has been using derivatives to run the closed block variable annuity unit. When the company gave some holders of closed-block annuities incentives to surrender their policies, the surrenders led to a $387 million drop in the fair market value of the derivatives associated with the policies.

The first-quarter net loss was mainly the result of the drop in the fair market value of the derivatives, Voya says.

Voya also reported operating earnings figures that exclude the effects of the $387 million change in derivatives value and other unusual gains and charges.

Operating income increased to $157 million in the latest quarter, from $115 million in the first quarter of 2016.

Continuing Operations

The Voya unit that sells the company’s new annuities increased its operating earnings to $64 million in the first quarter, from $51 million in the year-earlier quarter.

Individual life operating earnings fell to $32 million, from $41 million.

Companywide sales commission payments increased to $249 million, from $245 million.

Although operating earnings were up, Voya says low interest rates continue to present a challenge.

The company generated an average yield of 4.9% on the $90.4 billion in its general account investment portfolio in the first quarter, according to the quarterly report the company filed with securities regulators.

The company expects any assets it reinvests in fixed-income investments this year to earn an average yield of just 3.75% to 4.25%.

Voya also faces the possibility that the U.S. Department of Labor could still end up implementing the fiduciary rule and related interpretations completed under former President Barack Obama.

Voya executives said during the conference call that the company was already shifting toward an advisory model before the DOL fiduciary rule came along and expects to continue along that path no matter what the DOL does.

Annuity Trends

Carolyn Johnson, CEO of Voya’s annuities and individual life, said in an interview after Voya’s conference call that she sees advisors continuing to stay in the life and annuity markets in spite of all the turmoil.

“They’re still out there,” Johnson said. “Life insurance representatives aren’t giving up.”

Some financial professionals who started out in life insurance, then shifted toward selling more securities, now seem to be returning to their life insurance roots, Johnson said.

Johnson sees two reasons for that return to life roots.

One is that the life insurance sales process tends to be simpler.

In other cases, Johnson said, the new emphasis on holistic planning is revealing that the clients have big gaps in their insurance coverage.

Johnson also talked about how annuity products are changing.

At Voya, one focus is a push to appeal to banks and broker-dealers.

The company recently introduced the Voya Journey Index Annuity contract, a commission-based product designed to look like a bank certificate of deposit.

A fee-based version of the Journey contract will be coming out soon, Johnson said.