Industry Overview

Industry Overview

INSURANCE INDUSTRY AT A GLANCE

  • The U.S. insurance industry’s net premiums written totaled $1.1 trillion in 2012, with premiums recorded by life/health (L/H) insurers accounting for 58 percent and premiums by property/casualty (P/C) insurers accounting for 42 percent, according to SNL Financial LC.
  • P/C insurance consists primarily of auto, home and commercial insurance. Net premiums written for the sector totaled $456 billion in 2012.
  • The L/H insurance sector consists primarily of annuities and life insurance. Net premiums written for the sector totaled $643 billion in 2012.
  • Health insurance is generally considered separate. The sector includes private health insurance companies as well as government programs. P/C and L/H insurers also write some health insurance.
  • There were 6,115 insurance companies in 2012, including P/C (2,660 companies), life/annuities (913), health (806), fraternal (88), title (58), risk retention groups (272) and other companies (1,318).
  • Insurance carriers and related activities accounted for $398 billion, or 2.6 percent of U.S. gross domestic product in 2011.
  • The U.S. insurance industry employed 2.3 million people in 2012. Of those, 1.4 million worked for insurance companies, including life, health and medical insurers (807,900 workers), P/C insurers (591,300 workers) and reinsurers (25,600 workers). The remaining 912,300 people worked for insurance agencies, brokers and other insurance-related enterprises.
  • Total P/C cash and invested assets were $1.4 trillion in 2012. L/H cash and invested assets totaled $3.4 trillion in 2012. The majority of these assets were in bonds (65 percent of P/C assets and 75 percent of L/H assets).
  • P/C and L/H insurance companies paid $16.7 billion in premium taxes in 2012, or $53 for every person living in the United States.
  • P/C insurers paid out $35.0 billion in property losses related to catastrophes in 2012, compared with $33.6 billion in 2011, according to ISO. There were 26 catastrophes in 2012, compared with 30 in 2011.

U.S. PROPERTY/CASUALTY AND LIFE/HEALTH INSURANCE PREMIUMS, 2013 (1)

(1) Property/casualty: net premiums written, excludes state funds; life/health: premiums, annuity considerations (fees for annuity contracts) and deposit-type funds.

Source: SNL Financial LC.

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EMPLOYMENT IN INSURANCE, 2004-2013

(Annual averages, 000)

  Insurance carriers Insurance agencies, brokerages and related services  
  Direct insurers (1)            
Year Life, health
and medical
Property/
casualty
Reinsurers Total Insurance
agencies
and brokers
Other
insurance-
related
activities (2)
Total Total
industry
2004 767.3 691.2 29.8 1,488.3 645.6 233.6 879.2 2,367.5
2005 764.9 652.1 28.8 1,445.7 652.5 240.7 893.2 2,338.9
2006 790.6 649.1 28.0 1,467.7 662.4 249.0 911.4 2,379.1
2007 787.1 647.0 27.0 1,461.1 677.8 252.7 930.5 2,391.6
2008 800.8 646.7 27.9 1,475.4 671.6 258.1 929.6 2,405.1
2009 802.8 632.9 27.5 1,463.2 653.3 254.2 907.4 2,370.6
2010 804.1 614.3 26.8 1,445.2 642.3 253.1 895.5 2,340.6
2011 788.9 611.6 25.6 1,426.1 649.2 261.1 910.3 2,336.4
2012 811.3 599.5 25.7 1,436.4 659.6 272.3 931.8 2,368.3
2013 812.1 597.1 27.0 1,436.2 664.4 278.8 943.2 2,379.4

(1) Establishments primarily engaged in initially underwriting insurance policies.
(2) Includes claims adjusters, third-party administrators of insurance funds and other service personnel such as advisory and insurance ratemaking services.

Source: U.S. Department of Labor, Bureau of Labor Statistics.

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A property/casualty insurer must maintain a certain level of surplus to underwrite risks. This financial cushion is known as “capacity.” When the industry is hit by high losses, such as a major hurricane, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital.

PROPERTY/CASUALTY INSURANCE INDUSTRY INCOME ANALYSIS, 2008-2012 (1)

($ billions)

  2008 2009 2010 2011 2012
Net written premiums $434.9 $418.4 $423.8 $438.0 $457.0
     Percent change -1.3% -3.8% 1.3% 3.4% 4.3%
Earned premiums $438.3 $422.3 $422.2 $434.4 $449.4
Losses incurred 286.3 253.8 257.7 290.8 279.4
Loss adjustment expenses incurred 51.7 52.5 52.9 53.8 55.6
Other underwriting expenses 119.6 117.0 119.8 124.2 129.0
Policyholder dividends 2.0 2.0 2.3 1.9 2.1
Underwriting gain/loss -21.2 -3.0 -10.5 -36.2 -16.7
Investment income 51.5 47.1 47.6 49.2 47.7
Miscellaneous income/loss 0.4 0.9 1.1 2.5 2.3
Operating income/loss 30.6 45.0 38.2 15.4 33.3
Realized capital gain/loss -19.8 -7.9 5.9 7.0 6.2
Income taxes/credit 7.8 8.4 8.8 3.0 6.0
Net income after taxes 3.0 28.7 35.2 19.5 33.5

(1) Data in this chart exclude state funds and other residual market insurers and may not agree with similar data shown elsewhere from different sources.

Source: ISO, a Verisk Analytics company.

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TOP TEN WRITERS OF PROPERTY/CASUALTY INSURANCE BY DIRECT PREMIUMS WRITTEN, 2012

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 State Farm Mutual Automobile Insurance $53,654,237 10.3%
2 Liberty Mutual 28,297,511 5.4
3 Allstate Corp. 26,652,040 5.1
4 American International Group 23,596,418 4.5
5 Travelers Companies Inc. 22,695,958 4.3
6 Berkshire Hathaway Inc. 20,236,495 3.9
7 Farmers Insurance Group of Companies (3) 18,311,402 3.5
8 Nationwide Mutual Group 17,042,933 3.3
9 Progressive Corp. 16,559,746 3.2
10 USAA Insurance Group 13,286,274 2.5

(1) Before reinsurance transactions, includes state funds.
(2) Based on U.S. total, includes territories.
(3) Data for Farmers Insurance Group of Companies and Zurich Financial Group (which owns Farmers' management company) are reported separately by SNL Financial.

Source: SNL Financial LC.

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TOP TEN WRITERS OF LIFE INSURANCE/ANNUITIES BY DIRECT PREMIUMS WRITTEN, 2012

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc.  $102,321,495 16.6%
2 Prudential Financial Inc.  85,852,775 13.9
3 Jackson National Life Group  24,206,886 3.9
4 New York Life Insurance Group  24,010,473 3.9
5 ING Groep N.V.  23,513,207 3.8
6 Lincoln National Corp.  21,004,314 3.4
7 Manulife Financial Corp.  20,965,672 3.4
8 Massachusetts Mutual Life Insurance Co.  20,751,732 3.4
9 AEGON NV  19,695,559 3.2
10 Principal Financial Group Inc.  18,336,972 3.0

(1) Includes life insurance, annuity considerations, deposit-type contract funds and other considerations; excludes accident and health insurance from life/health insurers. Before reinsurance transactions.
(2) Based on U.S. total, includes territories.

Source: SNL Financial LC.

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LIFE/HEALTH INSURANCE INDUSTRY INCOME STATEMENT, 2008-2012

($ billions, end of year)

  2008 2009 2010 2011 2012 Percent change,
2011-2012 (1)
Revenue            
Life insurance premiums $142.7 $120.6 $100.3 $122.8 $130.6 6.3%
Annuity premiums and deposits 323.0 225.5 286.3 327.0 339.9 4.0
Accident and health premiums 154.5 160.0 167.8 168.3 170.7 1.4
Credit life and credit accident and health premiums 2.1 1.6 1.6 1.6 1.6 -1.7
Other premiums and considerations 0.8 0.5 23.1 2.1 2.2 8.5
Total premiums, consideration and deposits $623.1 $508.2 $579.1 $621.8 $645.0 3.7%
Net investment income 162.2 156.6 164.1 167.3 166.8 -0.3
Reinsurance allowance 17.8 61.5 -29.3 -16.3 -30.8 89.2
Separate accounts revenue 21.2 20.4 23.4 26.1 29.5 13.2
Other income 20.4 30.0 36.0 36.1 41.5 15.2
Total revenue $844.7 $776.7 $773.3 $835.0 $852.1 2.1%
Expense            
Benefits 238.4 242.2 245.2 252.8 257.8 2.0
Surrenders 291.5 228.7 216.8 237.3 245.7 3.6
Increase in reserves 144.2 99.2 96.2 141.2 83.8 -40.7
Transfers to separate accounts 22.7 11.1 29.3 32.4 61.6 89.8
Commissions 51.6 48.9 49.3 51.8 53.1 2.4
General and administrative expenses 53.3 54.0 56.6 58.3 59.3 1.7
Insurance taxes, licenses and fees 7.3 7.2 7.7 8.0 8.2 3.0
Other expenses 17.2 7.2 2.2 8.1 6.7 -17.9
Total expenses $826.1 $698.4 $703.3 $790.0 $776.1 -1.8%
Net income            
Policyholder dividends 17.7 15.0 15.0 15.1 15.2 0.7
Net gain from operations before Federal income tax -1.4 61.0 53.1 28.0 60.5 116.0
Federal income tax -0.1 10.7 9.0 5.1 10.2 101.0
Net income before capital gains
-$1.4 $50.3 $44.1 $22.9 $50.3 119.8%
Net realized capital gains (losses) -50.9 -28.7 -16.0 -8.5 -9.4 10.7
Net income -$52.3 $21.5 $28.0 $14.4 $40.9 184.6%
Pre-tax operating income -1.4 61.0 53.1 28.0 60.5 116.0

(1) Calculated from unrounded data.

Source: SNL Financial LC.

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