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The life/annuity/health insurance industry enjoyed slow but reasonably steady growth in most measures of operating income and outgo in the years heading into 2008. On the investment side, however, the net yield on invested assets continued dropping (following the general decline in prevailing interest rates), and the industry posted net realized capital losses in 2007 for the first time since 2001. However, the financial crisis that drastically reduced asset values by year-end 2008 resulted in a record $50+ billion in net realized capital losses that year. Moreover, the “Great Recession” led to a drop of roughly $120 billion (19%) in premium income for 2009, as well as another $28.7 billion in net realized capital losses. Nevertheless, the industry continued to pay benefits and dividends in 2009 and earned net income of $21 billion.
($ millions, end of period)
| 2005 | 2006 | 2007 | 2008 | 2009 | |
|---|---|---|---|---|---|
| Income statement | |||||
| Premiums, consideration and deposits | $526,289.9 | $578,970.4 | $617,692.0 | $632,201.3 | $512,901.4 |
| Net investment income | 155,173.0 | 161,862.0 | 167,744.7 | 161,737.5 | 156,449.9 |
| Separate accounts revenue | 16,373.5 | 20,169.0 | 22,897.6 | 21,177.3 | 20,375.3 |
| Total revenue | $731,239.3 | $791,929.7 | $821,582.6 | $851,658.9 | $779,032.6 |
| Benefits | 191,439.6 | 216,113.5 | 233,126.9 | 245,492.7 | 246,015.8 |
| Surrenders | 226,013.2 | 272,108.8 | 305,165.6 | 291,708.9 | 228,671.2 |
| Increase in reserves and deposits | 103,615.1 | 69,776.8 | 35,284.6 | 144,163.6 | 99,045.4 |
| Commissions | 48,104.8 | 49,847.9 | 51,057.7 | 51,993.5 | 49,031.7 |
| General and administrative expense | 46,877.9 | 49,490.4 | 52,558.5 | 54,093.9 | 54,364.5 |
| Net transfers to separate accounts | 42,753.8 | 60,911.4 | 66,100.6 | 22,654.6 | 11,098.0 |
| Policyholder dividends | 15,939.5 | 16,450.2 | 17,497.0 | 17,736.4 | 15,005.0 |
| Income tax | 8,612.2 | 11,090.7 | 11,848.7 | 187.2 | 11,280.4 |
| Net realized capital gains (losses) | 3,151.4 | 6,532.0 | (1,498.8) | (50,471.2) | (28,746.1) |
| Net Income | 36,474.9 | 37,689.9 | 31,832.3 | (51,834.6) | 21,108.5 |
| Pre-tax operating income | 41,935.5 | 42,365.7 | 45,179.9 | (1,174.8) | 61,135.0 |
Source: SNL Financial LC.