LIFE/HEALTH INSURANCE
The primary business of life/health insurance companies is
no longer traditional life insurance, but the underwriting
of annuities — contracts that guarantee a fixed or variable
payment over a given period of time. Nevertheless, the sale
of such life insurance products as whole life and term life
policies remains an important part of the business.
Life insurance is essentially an investment of savings that
offers a tax-free sum to the beneficiary at some point in
the future. Life insurers invest the premiums they collect
primarily in government and corporate bonds, but also in
mortgage loans (mostly commercial). Besides annuities and
life insurance, life insurers may offer other types of
financial services such as asset management.
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ASSETS AND LIABILITIES OF
LIFE INSURANCE COMPANIES, 2001 AND 2005
($ billions, end of year)
|
2001 |
2005 |
| Total
financial assets |
$3,224.6 |
$4,380.7 |
| Checkable
deposits and currency |
36.8 |
53.8 |
| Money market
fund shares |
173.3 |
118.6 |
| Credit market
instruments |
2,074.8 |
2,773.7 |
| U.S.
government securities |
307.2 |
455.9 |
| Open market
paper |
59.3 |
37.7 |
| Municipal
securities |
18.7 |
31.7 |
| Corporate
and foreign bonds |
1,342.4 |
1,859.8 |
| Policy
loans |
104.1 |
105.8 |
| Mortgages |
243.0 |
282.7 |
| Corporate
equities |
811.3 |
1,154.1 |
| Mutual fund
shares |
88.3 |
131.2 |
| Miscellaneous
assets |
40.1 |
149.4 |
| Total
liabilities |
3,034.8 |
4,119.3 |
| Loans and
advances |
3.1 |
11.5 |
| Life insurance
reserves |
842.2 |
1,078.1 |
| Pension fund
reserves (1) |
1,494.6 |
2,148.3 |
| Taxes payable |
19.7 |
31.6 |
| Miscellaneous
liabilities |
675.1 |
849.8 |
(1) Excludes
unallocated contracts held by private pension funds
which are included in miscellaneous liabilities.
Source: Board of Governors of the Federal Reserve
System. |
|
-Life insurance
assets increased by 5.3 from 2004 to 2005.
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|
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|
LIFE/HEALTH INSURANCE INDUSTRY:
SELECTED OPERATING DATA, 2003-2005
($ millions)
|
2003 |
2004 |
2005 |
| Premiums and
annuity considerations (1) |
$500,234.2 |
$531,160.4 |
$518,526.9 |
| Net investment
income |
142,912.9 |
145,544.9 |
148,985.9 |
| Net gain from
operations (2) |
39,113.2 |
41,146.1 |
40,171.4 |
| Federal and
foreign income taxes (3) |
7,890.5 |
10,002.6 |
9,016.2 |
| Net realized
capital gains/losses |
-4,668.3 |
1,039.8 |
3,184.6 |
| Net income |
26,554.4 |
32,183.3 |
34,339.8 |
| Dividends to
stockholders |
-10,958.9 |
-12,995.8 |
-21,692.3 |
| Capital and
surplus (end of year) |
223,771.1 |
237,014.2 |
239,742.7 |
|
(1) Life and accident and health policies and
contracts.
(2) After dividends to policyholders and before
federal income taxes.
(3) Incurred (excluding tax on capital gain).
Source:
National Association of Insurance Commissioners (NAIC)
Annual Statement Database, via Highline Data, LLC.
Copyrighted information. No portion of this work may
be copied or redistributed without the express
written permission of Highline Data, LLC.
|
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ASSETS
|
|
|
|
LIFE/HEALTH INSURER FINANCIAL ASSET
DISTRIBUTION, 2001-2005
($ billions)
|
2001 |
2002 |
2003 |
2004 |
2005 |
| Total
financial assets |
$3,224.6 |
$3,335.0 |
$3,772.8 |
$4,130.3 |
$4,380.7 |
| Checkable
deposits and currency |
36.8 |
35.3 |
47.3 |
53.3 |
53.8 |
| Money market
fund shares |
173.3 |
159.8 |
151.4 |
120.7 |
118.6 |
| Credit market
instruments |
2,074.8 |
2,307.8 |
2,488.3 |
2,661.4 |
2,773.7 |
| Open market
paper |
59.3 |
74.0 |
55.9 |
48.2 |
37.7 |
| U.S.
government securities |
307.2 |
409.4 |
420.7 |
435.6 |
455.9 |
|
Treasury |
53.7 |
78.5 |
71.8 |
78.5 |
81.1 |
|
Agency- and GSE (1) -backed securities |
253.5 |
330.9 |
348.9 |
357.1 |
374.8 |
| Municipal
securities |
18.7 |
19.9 |
26.1 |
30.1 |
31.7 |
| Corporate
and foreign bonds |
1,342.4 |
1,449.3 |
1,620.2 |
1,768.0 |
1,859.8 |
| Policy
loans |
104.1 |
105.1 |
104.5 |
106.1 |
105.8 |
| Mortgages |
243.0 |
250.0 |
260.9 |
273.3 |
282.7 |
| Corporate
equities |
811.3 |
708.9 |
919.3 |
1,053.9 |
1,154.1 |
| Mutual fund
shares |
88.3 |
76.6 |
91.7 |
114.4 |
131.2 |
| Miscellaneous
assets |
40.1 |
46.8 |
74.7 |
126.6 |
149.4 |
(1) GSE=government-sponsored
enterprise.
Source: Board of Governors of the Federal Reserve
System. |
|
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|
LIFE/HEALTH INSURER FINANCIAL
ASSETS, 2001-2005
($ billions)
Source: Board of Governors of the Federal Reserve System.
|
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PREMIUMS BY LINE
The dominant products of life insurers are annuities and
life insurance. Annuities offer a lifelong income or an
income for a specific period of time. They fall into two
major categories: fixed and variable. Fixed annuities,
sometimes called fixed dollar annuities, guarantee that a
specific sum of money will be paid in the future, generally
a monthly benefit, regardless of fluctuations in the
insurer’s underlying investment returns. With variable
annuities, fluctuations in the insurer’s investment earnings
over time affect the amount of funds available for benefit
payments. Once payments start, they may be fixed and
guaranteed or vary according to current investment earnings
or combine the two payment features. An equity-indexed
annuity is a fixed annuity with interest linked to a stock
index such as the S&P 500.
The big growth in annuity sales began in the 1970s when
investors began demanding returns that better reflected
inflation and stock market values. This demand resulted in
the variable annuity, an instrument so closely aligned to
the stock markets that it is now also sold by stockbrokers
and its underwriters and agents must register as securities
dealers with the Securities and Exchange Commission.
Credit life insurance is a form of decreasing term insurance
that protects creditors such as banks. Credit accident and
health is a similar product. Sales of both products have
declined since 1999.
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LIFE/HEALTH INSURANCE INDUSTRY
PREMIUM BY LINE, 2004 AND 2005
($ millions)
|
2004 |
2005 |
Lines of insurance |
Net premiums written |
Percent of total |
Net premiums written |
Percent of total |
| Industrial life |
$208.9 |
(1) |
$129.4 |
(1) |
| Ordinary life |
107,489.9 |
20.1 |
108,711.2 |
20.5% |
| Ordinary
industrial annuities |
167,472.0 |
31.4 |
162,760.5 |
30.7 |
| Credit life
(Group industrial) |
1,150.7 |
0.2 |
1,258.0 |
0.2 |
| Group annuities |
104,537.3 |
19.6 |
110,084.3 |
20.8 |
| Group life |
27,678.3 |
5.2 |
29,088.3 |
5.5 |
| Accident &
health group |
85,495.9 |
16.0 |
79,303.4 |
15.0 |
| Accident &
health credit |
1,156.5 |
0.2 |
1,135.4 |
0.2 |
| Accident &
health other |
38,674.1 |
7.2 |
37,343.7 |
7.0 |
| Total,
all lines |
533,863.6 |
100.0 |
529,814.0 |
100.0 |
| (1) Less than 0.1
percent. Source:
National Association of Insurance Commissioners (NAIC)
Annual Statement Database, via Highline Data, LLC.
Copyrighted information. No portion of this work may
be copied or redistributed without the express
written permission of Highline Data, LLC.
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CREDIT LIFE INSURANCE
Credit life insurance, a form of decreasing term insurance,
protects creditors such as banks. The borrower pays the
premium, generally as part of the credit transaction, to
cover the outstanding loan in the event he or she dies. The
face value of a policy decreases as the loan is paid off
until both equal zero. When loans are paid off early,
premiums for the remaining term are returned to the
policyholder. Credit accident and health, a similar product,
provides a monthly income in the event the borrower becomes
disabled.
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CREDIT LIFE, AND CREDIT ACCIDENT
AND HEALTH INSURANCE
DIRECT PREMIUMS WRITTEN, 1999-2004
($000)
Year |
Credit life |
Credit accident and health |
| 1999 |
$2,480,823 |
$2,503,615 |
| 2000 |
2,372,473 |
2,515,554 |
| 2001 |
2,006,309 |
2,275,416 |
| 2002 |
1,486,992 |
1,893,662 |
| 2003 |
1,147,397 |
1,438,215 |
| 2004 |
1,150,159 (1) |
1,156,527 (1) |
|
(1) National Association of Insurance Commissioners
(NAIC) Annual Statement Database, via Highline Data,
LLC. Copyrighted information. No portion of this
work may be copied or redistributed without the
express written permission of Highline Data, LLC.
Source: National Association of Insurance
Commissioners. Reprinted with permission. Further
reprint or redistribution strictly prohibited
without written permission of NAIC. |
|
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DISTRIBUTION CHANNELS
Life insurance was once sold primarily by career life
agents, captive agents that represent a single insurance
company, and by independent agents who represent several
insurers. Now life insurance company products are also sold
directly to the public by mail, telephone and the Internet.
In addition, in the 1980s insurers began to market annuities
and term life insurance through banks and financial
advisors, professional organizations and workplaces. A large
portion of variable annuities, which are based on stock
market performance, and a small portion of fixed annuities,
are sold by stockbrokers.
|
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|
LIFE INSURANCE DISTRIBUTION (NEW
INDIVIDUAL LIFE PREMIUMS), 2004 (1)
(1) Based on LIMRA International estimates.
Source: LIMRA International, Product Research.
|
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|
WORKSITE LIFE INSURANCE COMPANY
SALES
BY LINE OF BUSINESS, 2005 (1)
(1) Worksite marketing is the selling of voluntary
(employee-paid) insurance and financial products at the
worksite. The products may be on either an individual or
group platform and are usually paid through periodic payroll
deductions.
(2) Short-term and long-term disability.
Source: Eastbridge Consulting Group, Inc.
|
- Worksite sales of life and health insurance in
2005 were $4.4 billion, up from $4.2 billion in
2004.
|
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|
TOP TWENTY U.S. LIFE/HEALTH
INSURANCE GROUPS AND COMPANIES
BY REVENUES, 2005
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 |
MetLife |
$46,983 |
$481,645.0 |
| 2 |
Prudential
Financial |
31,708 |
417,776.0 |
| 3 |
New York Life
Insurance |
28,051 |
153,951.6 |
| 4 |
TIAA-CREF |
25,917 |
399,160.8 |
| 5 |
Mass. Mutual
Life Insurance |
22,799 |
138,365.0 |
| 6 |
Northwestern
Mutual |
19,221 |
133,057.2 |
| 7 |
AFLAC |
14,363 |
56,361.0 |
| 8 |
UnumProvident |
10,437 |
51,866.8 |
| 9 |
Guardian Life of
America |
9,377 |
36,880.2 |
| 10 |
Principal
Financial |
9,010 |
127,035.0 |
| 11 |
Assurant |
7,498 |
25,365.5 |
| 12 |
Thrivent
Financial for Lutherans |
6,190 |
54,932.1 |
| 13 |
Lincoln National |
5,488 |
124,787.6 |
| 14 |
Pacific Life |
4,840 |
86,977.2 |
| 15 |
Conseco |
4,327 |
31,557.3 |
| 16 |
Western &
Southern Financial |
4,314 |
29,020.6 |
| 17 |
Jefferson-Pilot |
4,220 |
36,078.3 |
| 18 |
Mutual of Omaha
Insurance |
4,051 |
16,441.3 |
| 19 |
Torchmark |
3,126 |
14,768.9 |
| 20 |
Unitrin |
3,048 |
9,198.3 |
| Source: Fortune. |
|
|
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|
TOP TEN GLOBAL LIFE/HEALTH
INSURANCE COMPANIES
BY REVENUES, 2005 (1)
($ millions)
Rank |
Company |
Revenues (2) |
Country |
| 1 |
ING Group |
$138,235 |
Netherlands |
| 2 |
AXA |
129,839 |
France |
| 3 |
Assicurazioni
Generali |
101,404 |
Italy |
| 4 |
Aviva |
92,579 |
U.K. |
| 5 |
Prudential |
74,745 |
U.K. |
| 6 |
Nippon Life
Insurance |
61,158 |
Japan |
| 7 |
Legal & General
Group |
56,385 |
U.K. |
| 8 |
CNP Assurances |
48,475 |
France |
| 9 |
MetLife |
46,983 |
U.S. |
| 10 |
Dai-ichi Mutual
Life Insurance |
44,598 |
Japan |
|
(1)
Based on an analysis of companies in the Global
Fortune 500. Includes stock and mutual companies.
(2)
Revenues include premium and annuity income,
investment income and capital gains or losses, but
exclude deposits; includes consolidated
subsidiaries, excludes excise taxes.
Source: Fortune. |
|
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|
LEADING INSURERS, LIFE INSURANCE
SALES THROUGH BANKS, 2003-2004 (1)
($ millions, weighed premiums)
|
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|
TOP TWENTY-FIVE LIFE INSURANCE
GROUPS,
BY INDIVIDUAL TERM LIFE INSURANCE ISSUED, 2004
|
|
Term life policies issued in 2004 |
Term life policies in force at 2004 year-end |
Rank |
Group |
Total amount of death benefits
($ billions) |
Number of policies issued (thousands) |
Average death benefit amount |
Number of policies in force(thousands) |
Individual term life insurance death benefits
($ billions) |
| 1 |
AIG Life Group |
$139.7 |
453.8 |
$307,844.9 |
3,424.3 |
$463.9 |
| 2 |
Citigroup |
87.3 |
314.6 |
277,495.2 |
4,450.7 |
558.9 |
| 3 |
Northwestern
Mutual |
68.9 |
121.4 |
567,545.3 |
1,165.3 |
457.3 |
| 4 |
State Farm |
59.1 |
324.6 |
182,070.2 |
2,567.4 |
357.8 |
| 5 |
Protective Life |
57.8 |
124.7 |
463,512.4 |
613.9 |
240.5 |
| 6 |
GE Global Ins |
56.2 |
137.6 |
408,430.2 |
10,428.6 |
898.2 |
| 7 |
AEGON USA Group |
54.8 |
158.2 |
346,397.0 |
9,927.9 |
843.4 |
| 8 |
New York Life
Group |
47.8 |
99.1 |
482,341.1 |
709.4 |
229.7 |
| 9 |
Prudential of
America Group |
47.2 |
85.2 |
553,990.6 |
2,195.7 |
388.6 |
| 10 |
Allstate
Financial |
43.0 |
101.2 |
424,901.2 |
1,427.9 |
320.4 |
| 11 |
Metropolitan
Life Group |
38.5 |
73.0 |
527,397.3 |
23,708.0 |
1,484.6 |
| 12 |
AXA Financial
Group |
33.4 |
65.0 |
513,846.2 |
5,356.2 |
215.9 |
| 13 |
USAA |
30.6 |
71.1 |
430,379.7 |
543.1 |
159.0 |
| 14 |
Lincoln National
Group |
29.3 |
61.3 |
477,977.2 |
7,053.2 |
708.9 |
| 15 |
Old Mutual US
Life Holdings |
27.3 |
144.2 |
189,320.4 |
468.1 |
63.9 |
| 16 |
Manulife
Financial |
26.4 |
36.2 |
729,281.8 |
7,086.2 |
297.9 |
| 17 |
AFLAC |
16.7 |
162.2 |
102,959.3 |
488.7 |
65.1 |
| 18 |
MassMutual
Financial |
15.4 |
27.0 |
570,370.4 |
250.6 |
112.4 |
| 19 |
Pacific Life
Group |
12.8 |
2.1 |
6,095,238.1 |
214.7 |
74.5 |
| 20 |
ING USA Life
Group |
10.7 |
19.3 |
554,404.1 |
9,619.7 |
796.5 |
| 21 |
Phoenix |
9.8 |
8.6 |
1,139,534.9 |
80.0 |
57.2 |
| 22 |
Ameriprise
Financial Group |
9.5 |
21.6 |
439,814.8 |
184.1 |
44.6 |
| 23 |
Torchmark
(Liberty National) |
8.9 |
317.7 |
28,013.8 |
1,363.5 |
43.8 |
| 24 |
Hartford Life
Group |
8.1 |
18.7 |
433,155.1 |
329.1 |
69.7 |
| 25 |
Nationwide
Financial |
7.0 |
19.2 |
364,583.3 |
207.8 |
44.8 |
| 25 |
Guardian Life |
7.0 |
6.4 |
1,093,750.0 |
2,651.8 |
52.0 |
| Source:
NAIC Annual Statement Database, via National
Underwriter Insurance Data Services/Highline Data. |
|
|
|
|
TOP TWENTY-FIVE LIFE INSURANCE
GROUPS,
BY INDIVIDUAL WHOLE LIFE AND ENDOWMENT INSURANCE ISSUED,
2004
|
|
Whole life and endowment policies issued in 2004 |
Whole life and endowment policies in force at 2004
year-end |
Rank |
Group |
Total amount of death benefits
($ billions) |
Number of policies issued (thousands) |
Average death benefit amount |
Number of policies in force (thousands) |
Total amount of death benefits
($ billions) |
| 1 |
New York Life
Group |
$28.4 |
201.0 |
$141,293.5 |
4,099.4 |
$373.5 |
| 2 |
Northwestern
Mutual |
27.7 |
138.6 |
199,855.7 |
3,630.8 |
412.2 |
| 3 |
Metropolitan
Life Group |
27.3 |
183.3 |
148,936.2 |
13,219.4 |
452.0 |
| 4 |
ING USA Life
Group |
26.0 |
360.5 |
72,122.1 |
5,211.4 |
271.2 |
| 5 |
AIG Life Group |
25.9 |
551.7 |
46,945.8 |
7,903.6 |
271.2 |
| 6 |
AEGON USA Group |
23.3 |
288.5 |
80,762.6 |
5,687.9 |
247.6 |
| 7 |
Manulife
Financial |
22.1 |
33.6 |
657,738.1 |
2,903.8 |
251.9 |
| 8 |
Torchmark
(Liberty National) |
20.6 |
1,099.2 |
18,740.9 |
5,810.7 |
77.9 |
| 9 |
Protective Life |
20.0 |
68.8 |
290,697.7 |
1,157.5 |
154.4 |
| 10 |
Guardian Life |
19.1 |
43.1 |
443,155.5 |
889.3 |
151.6 |
| 11 |
State Farm |
17.2 |
298.9 |
57,544.3 |
4,435.5 |
199.4 |
| 12 |
MassMutual
Financial |
15.3 |
37.0 |
413,513.5 |
1,667.6 |
222.3 |
| 13 |
AXA Financial
Group |
14.5 |
34.8 |
416,666.7 |
2,831.2 |
247.8 |
| 14 |
Allstate
Financial |
14.0 |
120.5 |
116,182.6 |
1,969.2 |
171.9 |
| 15 |
Citigroup |
12.9 |
40.8 |
316,176.5 |
510.1 |
66.2 |
| 16 |
Pacific Life
Group |
12.0 |
22.7 |
528,634.4 |
294.6 |
100.7 |
| 17 |
Ameriprise
Financial Group |
11.9 |
32.2 |
369,565.2 |
449.0 |
101.8 |
| 18 |
Hartford Life
Group |
11.8 |
36.2 |
325,966.9 |
832.7 |
252.3 |
| 19 |
Lincoln National
Group |
11.3 |
16.3 |
693,251.5 |
805.1 |
130.4 |
| 20 |
Principal
Financial Group |
10.7 |
22.3 |
479,820.6 |
582.2 |
74.0 |
| 21 |
Jefferson-Pilot |
10.2 |
26.2 |
389,313.0 |
1,092.4 |
135.9 |
| 22 |
Prudential of
America Group |
10.1 |
57.6 |
175,347.2 |
8,886.1 |
334.3 |
| 23 |
Nationwide
Financial |
8.1 |
25.2 |
321,428.6 |
978.9 |
120.2 |
| 24 |
Sun Life
Financial Group |
4.8 |
5.7 |
842,105.3 |
217.6 |
48.7 |
| 25 |
AFLAC |
4.5 |
81.7 |
55,079.6 |
458.6 |
14.7 |
| Source:
NAIC Annual Statement Database, via National
Underwriter Insurance Data Services/Highline Data. |
|
