Life Insurance
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THE LIFE/HEALTH INSURANCE INDUSTRY
Whether measured by premium income or by assets, traditional life insurance is no longer the primary business of many companies in the life/health insurance industry. Today, the emphasis has shifted to the underwriting of annuities. Annuities are contracts that accumulate funds and/or pay out a fixed or variable income stream. An income stream can be for a fixed period of time or over the lifetimes of the contract holder and his or her beneficiaries.
Nevertheless, traditional life insurance products such as universal life and term life for individuals as well as group life remain an important part of the business, as do disability income and health insurance.
Life insurers invest primarily in corporate bonds but also significantly in corporate equities. Besides annuities and life insurance products, life insurers may offer other types of financial services such as asset management.
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TOP TEN UNDERWRITERS OF BANK LIFE PREMIUMS
RANKED BY TOTAL NEW PREMIUM, 2006
($ millions)
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Premiums |
Rank |
Company |
2005 |
2006 |
| 1 | Transamerica | $231.6 | $178.2 |
| 2 | Allstate | 245.9 | 166.5 |
| 3 | Liberty Life of Boston | 151.4 | 131.4 |
| 4 | Hartford | 70.9 | 116.8 |
| 5 | Lincoln National | 49.4 | 62.1 |
| 6 | OneAmerica | 41.2 | 53.6 |
| 7 | Aviva | 51.7 | 52.6 |
| 8 | Protective | 35.0 | 49.5 |
| 9 | Nationwide | 33.1 | 28.4 |
| 10 | John Hancock | 13.0 | 15.5 |
| Source: Kehrer-LIMRA. |
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INVESTMENTS, LIFE/HEALTH INSURERS, 2002-2006
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Amount
($ billions) |
Percent of total investments |
Investment type |
2002 |
2005 |
2006 |
2002 |
2005 |
2006 |
| Bonds | $1,706.2 | $2,146.2 | $2,134.7 | 73.65% | 76.71% | 74.28% |
| Stocks | 88.1 | 94.3 | 138.6 | 3.81 | 3.37 | 4.82 |
| Preferred stocks | 24.7 | 25.7 | 64.6 | 1.07 | 0.92 | 2.25 |
| Common stocks | 63.4 | 68.7 | 74.0 | 2.74 | 2.45 | 2.58 |
| Mortgage loans on real estate | 243.5 | 276.5 | 294.0 | 10.23 | 9.88 | 10.51 |
| First liens | 242.1 | 275.2 | 292.9 | 10.45 | 9.84 | 10.19 |
| Other than first liens | 1.4 | 1.3 | 1.1 | 0.06 | 0.05 | 0.04 |
| Real estate | 18.8 | 19.1 | 21.8 | 0.94 | 0.68 | 0.65 |
| Properties occupied by company | 6.0 | 5.4 | 5.7 | 0.26 | 0.19 | 0.20 |
| Properties held for income production | 13.5 | 12.8 | 12.4 | 0.58 | 0.46 | 0.43 |
| Properties held for sale | 2.4 | 0.9 | 0.7 | 0.10 | 0.03 | 0.02 |
| Cash, cash eqivalent and short-term investments | 84.6 | 62.0 | 79.8 | 3.65 | 2.22 | 2.78 |
| Contract loans | 104.4 | 106.4 | 109.8 | 4.51 | 3.80 | 3.82 |
| Other invested assets | 54.3 | 77.6 | 80.1 | 2.34 | 2.77 | 2.79 |
| Receivables for securities | 3.1 | 3.0 | 3.0 | 0.13 | 0.11 | 0.11 |
| Aggregate write-ins for invested assets | 10.4 | 12.5 | 15.0 | 0.45 | 0.45 | 0.52 |
| Total | $2,316.5 | $2,797.7 | $2,873.8 | 100.00% | 100.00% | 100.00% |
| Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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LIFE/HEALTH INSURANCE INDUSTRY: SELECTED OPERATING DATA, 2004-2006
($ millions)
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2004 |
2005 |
2006 |
| Net premiums and annuity considerations (1) | $531,160.3 | $528,143.1 | $583,572.6 |
| Net investment income | 145,544.8 | 154,600.0 | 158,116.7 |
| Net gain from operations (2) | 41,146.0 | 41,481.2 | 38,734.3 |
| Federal and foreign income taxes (3) | 10,002.6 | 8,660.0 | 11,298.2 |
| Net realized capital gains/losses | 1,039.8 | 3,115.1 | 6,529.9 |
| Net income | 32,183.3 | 35,936.3 | 33,966.0 |
| Dividends to stockholders | 17,019.8 | 15,939.5 | 16,450.2 |
| Capital and surplus (end of year) | 196,843.0 | 231,115.0 | 222,335.1 |
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(1) Annuities, life and accident and health policies and contracts.
(2) After dividends to policyholders and before federal income taxes.
(3) Incurred (excluding tax on capital gain).
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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LIFE/HEALTH INSURER FINANCIAL ASSET DISTRIBUTION, 2002-2006
($ billions)
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2002 |
2003 |
2004 |
2005 |
2006 |
| Total financial assets | $3,335.0 | $3,772.8 | $4,130.3 | $4,350.7 | $4,708.8 |
| Checkable deposits and currency | 35.3 | 47.3 | 53.3 | 47.7 | 46.3 |
| Money market fund shares | 159.8 | 151.4 | 120.7 | 113.6 | 162.3 |
| Credit market instruments | 2,307.8 | 2,488.3 | 2,661.4 | 2,765.4 | 2,850.1 |
| Open market paper | 74.0 | 55.9 | 48.2 | 40.2 | 49.5 |
| U.S. government securities | 409.4 | 420.7 | 435.6 | 459.7 | 470.5 |
| Treasury | 78.5 | 71.8 | 78.5 | 91.2 | 93.4 |
| Agency- and GSE (1)-backed securities | 330.9 | 348.9 | 357.1 | 368.5 | 377.1 |
| Municipal securities | 19.9 | 26.1 | 30.1 | 32.5 | 33.2 |
| Corporate and foreign bonds | 1,449.3 | 1,620.2 | 1,768.0 | 1,840.7 | 1,881.8 |
| Policy loans | 105.1 | 104.5 | 106.1 | 106.9 | 110.9 |
| Mortgages | 250.0 | 260.9 | 273.3 | 285.5 | 304.1 |
| Corporate equities | 708.9 | 919.3 | 1,053.9 | 1,161.8 | 1,405.2 |
| Mutual fund shares | 76.6 | 91.7 | 114.4 | 109.0 | 119.6 |
| Miscellaneous assets | 46.8 | 74.7 | 126.6 | 153.1 | 125.3 |
(1) Government-sponsored enterprise.
Source: Board of Governors of the Federal Reserve System. |
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PREMIUMS BY LINE
Measured by premiums written, annuities are the largest life/health product line, followed by life insurance and health insurance (referred to in the industry as accident and health). Life insurance policies can be sold on an individual, or "ordinary," basis or to groups such as employees and associations. Accident and health insurance includes medical expense, disability income and long-term care. Other lines include credit life, which pays the balance of a loan if the borrower dies or becomes disabled, and industrial life, small policies whose premiums are generally collected by an agent on a weekly basis.
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LIFE/HEALTH INSURANCE INDUSTRY PREMIUM BY LINE, 2002-2006
($ millions)
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2002 |
2005 |
2006 |
Lines of insurance |
Direct premiums written (1) |
Percent of total |
Direct premiums written (1) |
Percent of total |
Direct premiums written (1) |
Percent of total |
| Annuities | | | | | | |
| Ordinary individual annuities | $176,627.7 | 33.1% | $177,602.1 | 31.4% | $193,432.6 | 31.2% |
| Group annuities | 101,886.8 | 19.1 | 110,951.6 | 19.6 | 117,152.7 | 18.9 |
| Total | $278,514.5 | 52.1% | $288,553.6 | 51.0% | $310,585.2 | 50.1% |
| Life | | | | | | |
| Ordinary life | 111,733.3 | 20.9 | 123,259.4 | 21.8 | 129,241.6 | 20.9 |
| Group life | 28,227.7 | 5.3 | 30,220.7 | 5.3 | 35,255.0 | 5.7 |
| Credit life (group and individual) | 1,778.3 | 0.3 | 1,597.7 | 0.3 | 1,555.7 | 0.3 |
| Industrial life | 306.0 | 0.1 | 250.2 | (2) | 239.6 | (2) |
| Total | $142,045.2 | 26.6% | $155,328.1 | 27.5% | $166,291.9 | 26.8% |
| Accident and health (3) | | | | | | |
| Group | 76,352.9 | 14.3 | 78,781.1 | 13.9 | 84,235.7 | 13.6 |
| Other | 35,315.2 | 6.6 | 40,084.6 | 7.1 | 57,169.3 | 9.2 |
| Credit | 1,869.5 | 0.3 | 1,495.2 | 0.3 | 1,430.7 | 0.2 |
| Total | $113,537.6 | 21.3% | $120,360.9 | 21.3% | $142,835.7 | 23.0% |
| All other lines | 91.5 | (2) | 1,325.0 | 0.2 | 0.1 | (2) |
| Total, all lines | $534,188.8 | 100.0% | $565,567.7 | 100.0% | $619,712.9 | 100.0% |
(1) Before reinsurance transactions.
(2) Less than 0.1 percent.
(3) Does not include A/H premiums reported on the P/C and health annual statements.
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, 1997-2006
($000)
Year |
Credit life |
Credit accident and health |
| 1997 | $1,969,079 | $1,897,056 |
| 1998 | 1,998,488 | 1,798,194 |
| 1999 | 1,971,462 | 1,724,729 |
| 2000 | 1,849,655 | 1,675,327 |
| 2001 | 1,632,806 | 1,551,697 |
| 2002 | 1,251,275 | 1,331,639 |
| 2003 | 1,046,474 | 1,119,672 |
| 2004 | 1,150,182 | 1,156,540 |
| 2005 | 1,257,314 | 1,135,342 |
| 2006 | 1,091,659 | 1,012,255 |
| Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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TOP TWENTY U.S. LIFE/HEALTH INSURANCE GROUPS BY REVENUES, 2007 (1)
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 | MetLife | $53,150 | $558,562 |
| 2 | Prudential Financial | 34,401 | 485,814 |
| 3 | New York Life Insurance | 29,280 | 179,621 |
| 4 | TIAA-CREF | 27,526 | 420,315 |
| 5 | Massachusetts Mutual Life Insurance | 25,268 | 172,911 |
| 6 | Northwestern Mutual | 22,597 | 156,547 |
| 7 | AFLAC | 15,393 | 65,805 |
| 8 | Genworth Financial | 11,443 | 114,315 |
| 9 | Principal Financial | 10,907 | 154,520 |
| 10 | Lincoln National | 10,738 | 191,435 |
| 11 | Unum Group | 10,567 | 52,433 |
| 12 | Guardian Life Ins. Co. of America | 10,071 | 41,319 |
| 13 | Thrivent Financial for Lutherans | 6,133 | 57,412 |
| 14 | Pacific Life | 5,325 | 111,024 |
| 15 | Western & Southern Financial Group | 4,811 | 30,941 |
| 16 | Conseco | 4,572 | 33,515 |
| 17 | Mutual of Omaha Insurance | 4,337 | 17,746 |
| 18 | CUNA Mutual Group | 3,850 | 14,946 |
| 19 | Torchmark | 3,487 | 15,241 |
| 20 | American National Insurance | 3,071 | 18,465 |
| (1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.
Source: Fortune. |
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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 is also sold directly to the public by mail, telephone and through the Internet. In addition, in the 1980s insurers began to market annuities and term life insurance through banks and financial advisors, professional groups and the workplace. A large portion of variable annuities and a small portion of fixed annuities, are sold by stockbrokers. By 2006 affiliated (i.e., captive) agents held 35 percent of new individual life insurance sales, independent agents held 56 percent and others, including stockbrokers, accounted for the remaining 9 percent, according to LIMRA.
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INDIVIDUAL LIFE MARKET SHARE BY CHANNEL, 1983-2006
(Based on first year collected premium)
(1) Includes career, multiline exclusive agents and home service.
(2) Includes brokers and personal producing general agents.
(3) Includes stockbrokers, financial institutions and direct.
(4) Estimate.
Source: LIMRA’s Market Share by Distribution Channel Survey, LIMRA estimates.
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WORKSITE LIFE INSURANCE COMPANY SALES
BY LINE OF BUSINESS, 2006 (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: East Bridge Consultants.
| - Worksite sales of life and health insurance in 2006 were $4.7 billion, up 8
percent from $4.4 billion in 2005.
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TOP TEN LIFE INSURANCE GROUPS BY NUMBER OF INDIVIDUAL TERM LIFE INSURANCE POLICIES ISSUED, 2006
Rank |
Company |
Number of policies issued |
Amount of insurance issued ($000) |
Average amount issued per policy |
| 1 | State Farm Consolidated | 382,044 | $79,367,426 | $207,744 |
| 2 | American International Consolidated | 378,566 | 133,836,830 | 353,536 |
| 3 | Citigroup Consolidated | 259,499 | 75,825,937 | 292,201 |
| 4 | Direct General Group Consolidated | 258,480 | 2,950,590 | 11,415 |
| 5 | Liberty National Consolidated | 255,598 | 6,636,489 | 25,965 |
| 6 | Genworth Financial Group Consolidated | 185,029 | 82,172,079 | 444,104 |
| 7 | American Family Corp. Consolidated | 168,657 | 16,236,462 | 96,269 |
| 8 | Protective Life Insurance Consolidated | 139,893 | 65,506,562 | 468,262 |
| 9 | Old Mutual Consolidated | 130,190 | 28,599,498 | 219,675 |
| 10 | Northwestern Mutual Consolidated | 115,849 | 73,669,181 | 635,907 |
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(1) Ranked by the number of policies issued.
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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TOP 25 LIFE INSURANCE GROUPS BY NUMBER OF INDIVIDUAL WHOLE LIFE AND ENDOWMENT INSURANCE POLICIES ISSUED, 2006 (1)
Rank |
Company |
Number of policies |
Amount of insurance issued ($000) |
Average amount issued per policy |
| 1 | Liberty National Consolidated | 1,072,960 | $19,037,775 | $17,743 |
| 2 | Gerber Life Insurance Company | 577,551 | 4,971,751 | 8,608 |
| 3 | American International Consolidated | 531,790 | 26,986,466 | 50,746 |
| 4 | State Farm Consolidated | 275,206 | 17,167,091 | 62,379 |
| 5 | UnumProvident Life Consolidated | 257,001 | 6,336,959 | 24,657 |
| 6 | AEGON USA Incorporated Consolidated | 253,848 | 21,199,043 | 83,511 |
| 7 | Mutual of Omaha Consolidated | 181,287 | 3,746,233 | 20,665 |
| 8 | Metropolitan Group Consolidated | 169,377 | 28,396,202 | 167,651 |
| 9 | New York Life Consolidated | 166,587 | 29,796,194 | 178,863 |
| 10 | Unitrin Group Consolidated | 146,868 | 1,194,457 | 8,133 |
| 11 | American Family Corp. Consolidated | 136,263 | 5,298,130 | 38,882 |
| 12 | Northwestern Mutual Consolidated | 132,208 | 30,072,436 | 227,463 |
| 13 | Allstate Insurance Consolidated | 121,705 | 15,645,998 | 128,557 |
| 14 | Conseco Consolidated | 111,995 | 2,226,078 | 19,877 |
| 15 | Zurich Insurance Group Consolidated | 81,467 | 6,180,656 | 75,867 |
| 16 | Boston Mutual Insurance Consolidated | 74,723 | 1,265,135 | 16,931 |
| 17 | American National FNCL Consolidated | 68,489 | 2,565,890 | 37,464 |
| 18 | Security Mutual Life Insurance Company of NY | 53,117 | 2,210,566 | 41,617 |
| 19 | Western Southern Life Consolidated | 52,314 | 2,386,054 | 45,610 |
| 20 | Columbian Life Consolidated | 49,746 | 509,804 | 10,248 |
| 21 | Protective Life Insurance Consolidated | 47,570 | 15,514,330 | 326,137 |
| 22 | ING America Insurance Holding Group Consolidated | 45,311 | 9,348,070 | 206,309 |
| 23 | Lincoln Heritage Life Insurance Company | 44,881 | 370,314 | 8,251 |
| 24 | Southern Farm Consolidated | 40,117 | 1,847,646 | 46,056 |
| 25 | Great American Life Assurance Company | 38,562 | 173,893 | 4,509 |
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(1) Benefit is payable either at death or at stated date if policyholder is still alive on that date.
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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