Best’s Special Report: U.S. Life/Annuity Insurers’ Net Income Rebounds Significantly in First-Half 2017

OLDWICK, N.J.--(BUSINESS WIRE)-- The U.S. life/annuity (L/A) industry’s net income for the first six months of 2017 rose to $18.5 billion, compared with a net loss of $2.6 billion for the same period in 2016. These preliminary financial results are detailed in a new Best’s Special Report, titled, “A.M. Best First Look—2Qtr 2017 U.S. Life/Annuity Financial Results,” and the data is derived from companies’ six-month 2017 interim statutory statements that were received by Aug. 21, 2017, representing an estimated 84% of total industry premiums and annuity considerations.

According to the report, the significant increase in net income was mainly due to a $45.0 billion drop in total expenses and taxes and a $1.2 billion improvement in realized capital losses. In addition, capital and surplus for the industry increased by $12.2 billion since the start of the year and reached a record $365.6 billion as of June 2017. The significant improvement in net income and a 15.2% reduction in stockholder dividends offset steep declines in unrealized gains and contributed capital. These results were significantly impacted by the effects of large reinsurance agreements undertaken in 2016 and 2017.

Total income dropped 7% to $348.9 billion. The reduction in income was further exacerbated by a 40% decline in commissions and expense allowances on reinsurance ceded, again due to the reinsurance agreements. A 24% increase in other income was not enough to overcome these declines. Despite the drop in income, the reduction in expenses drove pretax net operating gain up 350% over the prior year to $25.3 billion.

To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=265161.

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Source: A.M. Best