Life Insurance

Best’s Special Report: First-Half 2022 Net Income In U.S. Life/Annuity Insurance Industry Jumps By More Than 60%

Total income rises 3.2% to $478.8 billion

OLDWICK, N.J., September 12, 2022—Net income for U.S. life/annuity (L/A) insurance industry increased by 62% in the first half of 2021, rising to $20.9 billion from $12.9 billion in the same prior-year period, according to a new AM Best report.

This financial review is detailed in a new Best’s Special Report, titled, “First Look: Six-Month 2022 U.S. Life/Annuity Financial Results,” and the data is derived from companies’ six-month 2022 interim statutory statements that were received as of Sept. 8, 2022, representing an estimated 99% of total industry premiums and annuity considerations.

Total income in the L/A industry rose 3.2% to $478.8 billion from the prior-year period, driven by a 5.3% increase in net investment income and 161.9% rise in other income. Total expenses for the industry grew 4.6%, largely due to a $12.2 billion reduction in net transfers to separate accounts. The resulting pretax net operating gain was $24.1 billion, down 18.0% from first-half 2021. A $1.6 billion decrease in tax obligations and $11.7 billion decline in net realized capital losses contributed to the industry’s net income of $20.9 billion. Capital and surplus declined 1.9% from the end of 2021, to $481.1 billion.

Excerpts From The Special Report

AM Best’s First Look report provides early insight into the current financial state of the US life/annuity industry. The data in this report are from companies whose six month 2022 interim period statutory statements were received as of September 8, 2022. These companies account for an estimated 99% of total industry premiums and annuity considerations and 98% of capital and surplus.

During the first six months of 2022, US life/annuity total income rose 3.2% from the prior year period, driven by a 5.3% increase in net investment income and 161.9% rise in other income, driven by Separate Accounts operating gains and lower reserve adjustments on reinsurance ceded. Total expenses for the industry grew 4.6%, largely due to a $12.2 billion reduction in net transfers to Separate Accounts. Resulting pretax net operating gain was $24.1 billion, down 18.0%. A $1.6 billion decrease in tax obligations and $11.7 billion decline in net realized capital losses contributed to the industry’s net income of $20.9 billion, up 61.7% from the same period in 2021.

Capital and surplus declined 1.9% from the end of 2021 to $481.1 billion, as $34.2 billion of net income, contributed capital, and change in asset valuation reserve were reduced by $43.3 billion, consisting of a change in unrealized losses, other changes in surplus, and stockholder dividends.

Holdings in cash and short-term investments declined 10.0% from the end of 2021. Investments in mortgage loans continue to climb, increasing 5.2% from the end of 2021, with the asset class now constituting 13.2% of total invested assets.

To access the full copy of this special report, please visit here.

 

 

 

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

 

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