Best’s Special Report

U.S. Life/Annuity Insurers’ Net Income Fell by 18% in Nine-Month 2019 Period

Decline in the industry’s bond positions continued

OLDWICK, N.J., November 26, 2019—Net income in the U.S. life/annuity industry dropped by approximately 18% to $27.6 billion in the first nine months of 2019, compared with the same prior-year period, as net realized capital losses declined $4.9 billion. This financial review is detailed in a new Best’s Special Report, titled, “First Look – 9-Month 2019 Life/Annuity Financial Results,” and the data is derived from companies’ nine-month 2019 interim statutory statements that were received as of Nov. 20, 2019, representing an estimated 95% of total industry premiums and annuity considerations.

According to the AM Best report, a $56.9 billion increase in premiums and annuity considerations was countered by a $41.1 billion decline in other income, resulting in a slight 2.3% total income increase for the life/annuity industry to $660.6 billion for the nine-month period.

Capital & Surplus Grew

These swings were largely the result of modified coinsurance agreements and the recapture of retrocessions from foreign affiliates at American General Life Insurance Company, United States Life Insurance in the City of New York, Delaware Life Insurance Company and Hannover Life Reassurance Company of America. Total expenses increased 4.3% from the same prior-year period, and with that increase outpacing the increase in nine-month total income, the industry’s pre-tax operating gain declined 26.1% from the prior year to $31.9 billion. Despite the decline in net income, the segment’s capital and surplus grew 7.0% from the end of 2018 to $425.2 billion.

The decline in the industry’s bond positions continued during the first nine months of 2019. Mortgage loans, which have grown steadily over the last five nine-month year-to-date periods, are up 42% from the first nine months of 2015 and now constitute 12.8% of total invested assets.

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AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit