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 set period of time or over the lifetimes of the contract holder or 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.
2014 FINANCIAL RESULTS
In 2014 the life insurance industry posted mixed results as it continued to face challenges from little household income growth, changing demographics, low interest rates and consumers having other financial priorities. Although premiums rose to the highest level since the Great Recession, operating results declined compared with 2013 partly because of significantly increased surrenders. The industry’s net gain from operations before federal income taxes dropped to $49.0 billion in 2014 from $63.8 billion in 2013. Capital and surplus rose to $354.1 billion in 2014 from $331.8 billion in 2013, according to SNL Financial.
The life/health insurance industry’s cash and invested assets totaled $3.6 trillion in 2014, according to SNL Financial.
LIFE/HEALTH INSURANCE INDUSTRY INCOME STATEMENT, 2010-2014
($ billions, end of year)