Facts + Statistics: Life insurance

 
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 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.

 
Life insurance ownership

About sixty percent of all people in the United States were covered by some type of life insurance in 2018, according to LIMRA’s 2018 Insurance Barometer Study. Other findings from the study include:

  • Among those with life insurance, about 1 in 5 say that they do not have enough.
  • Half of all adults visited a life company website and/or sought life insurance information online in 2018. Almost 1 in 3 purchased or attempted to purchase life insurance online — about the same as in 2017.
  • Consumers overestimate the cost of life insurance, especially younger generations; 44 percent of Millennials overestimate the cost at five times the actual amount.
  • Half of all consumers say they are more likely to purchase life insurance if priced without a physical examination.

 
Investments, Life/Health Insurers, 2014-2016 (1)

($ billions, end of year)

  Amount Percent of total investments
Investment type 2014 2015 2016 2014 2015 2016
Bonds $2,684.9 $2,734.1 $2,860.7 73.93% 73.82% 73.50%
Stocks $86.2 $84.9 $96.0 2.37% 2.29% 2.47%
     Preferred stock 9.1 9.6 9.6 0.25 0.26 0.25
     Common stock 77.0 75.2 86.4 2.12 2.03 2.22
Mortgage loans on real estate $373.0 $404.2 $437.7 10.27% 10.91% 11.25%
     First lien real estate mortgage loans 368.4 397.4 430.1 10.14 10.73 11.05
     Real estate loans less first liens 4.6 6.8 7.6 0.13 0.18 0.20
Real estate $21.9 $23.7 $24.5 0.60% 0.64% 0.63%
     Occupied properties 5.5 5.5 6.0 0.15 0.15 0.15
     Income generating properties 16.0 17.8 17.6 0.44 0.48 0.45
     Properties for sale  0.4 0.4 0.9 0.01 0.01 0.02
Cash, cash equivalent and short term investments 100.0 103.3 101.4 2.75 2.79 2.61
Contract loans including premium notes 130.1 126.8 126.9 3.58 3.42 3.26
Derivatives 56.5 53.8 62.0 1.56 1.45 1.59
Other invested assets 161.8 154.9 158.3 4.46 4.18 4.07
Receivables for securities 2.2 2.3 3.9 0.06 0.06 0.10
Securities lending reinvested collateral assets 11.2 11.7 12.6 0.31 0.32 0.32
Write-ins for invested assets 4.0 4.1 8.0 0.11 0.11 0.20
Total cash and invested assets $3,631.7 $3,703.9 $3,891.9 100.00% 100.00% 100.00%

(1) Data are net admitted assets of life/health insurers.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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2016 financial results

According to S&P Global Market Intelligence, in 2016 the life insurance industry posted a 2.2 percent decrease in net income after taxes. Net gains from operations (net of federal income tax) rose by nearly 16 percent, but capital losses of $11.4 billion offset all of that gain, and more.  Premiums and annuity considerations were down 6.0 percent in 2016 compared with 2015 mainly because life insurance premiums fell by 24 percent. Expenses fell by 1.1 percent in 2016; benefits (including additions to reserves and transfers to separate accounts) dropped by 3.5 percent. Capital and surplus rose to $380.7 billion in 2016 from $367.2 billion in 2015, according to S&P Global Market Intelligence.

 
Life/Health Insurance Industry Income Statement, 2012-2016

($ billions, end of year)

  2012 2013 2014 2015 2016 Percent change,
2015-2016 (1)
Revenue            
     Life insurance premiums $130.5 $126.0 $133.9 $151.4 $115.0 -24.0%
     Annuity premiums and deposits 339.9 279.4 352.8 324.0 318.5 -1.7
     Accident and health premiums 151.4 153.3 156.6 158.8 162.9 2.5
     Credit life and credit accident and health premiums 1.6 1.4 1.4 1.4 1.3 -8.6
     Other premiums and considerations 2.2 2.3 2.6 2.5 2.2 -12.2
     Total premiums, consideration and deposits $625.6 $562.6 $647.3 $638.2 $599.9 -6.0%
     Net investment income 166.5 167.1 171.7 170.8 173.0 1.3
     Reinsurance allowance -30.8 -21.2 -15.0 -86.4 -17.0 NA
     Separate accounts revenue 29.5 31.4 34.3 35.2 34.7 -1.5
     Other income 41.6 42.8 39.7 90.5 61.3 -32.2
     Total revenue $832.5 $782.7 $878.0 $848.2 $851.9 0.4%
Expense            
     Benefits 241.8 250.6 251.8 263.9 271.4 2.8
     Surrenders 245.7 248.7 281.5 273.0 265.1 -2.9
     Increase in reserves 83.8 86.2 108.7 80.5 133.1 65.3
     Transfers to separate accounts 61.6 -0.8 -16.5 36.9 -38.0 -203.0
     Commissions 52.6 53.0 52.1 55.5 64.6 16.3
     General and administrative expenses 57.2 58.5 59.0 60.1 62.4 3.8
     Insurance taxes, licenses and fees 8.0 8.2 10.0 10.5 10.8 3.3
     Other expenses 7.1 -0.2 66.0 -4.9 -2.7 NA
     Total expenses $757.8 $704.3 $812.5 $775.5 $766.6 -1.1%
Net income            
Policyholder dividends 15.2 15.7 16.4 18.3 18.2 -0.2
Net gain from operations before federal income tax 59.6 62.9 49.0 54.4 67.1 23.3
Federal income tax 9.9 8.6 10.1 10.6 16.3 54.1
Net income before capital gains $49.7 $54.3 $38.9 $43.8 $50.8 15.9%
Net realized capital gains (losses) -9.4 -12.0 -1.3 -3.5 -11.4 NA
Net income $40.3 $42.3 $37.6 $40.3 $39.4 -2.2%
Pre-tax operating income 59.6 62.9 49.0 54.4 67.1 23.3

(1) Calculated from unrounded data.

NA=Not applicable.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Life/Health Insurer Financial Asset Distribution, 2010-2014

($ billions)

  2010 2011 2012 2013 2014
Total financial assets $5,167.8 $5,340.1 $5,614.7 $5,977.3 $6,227.1
Checkable deposits and currency 51.7 53.7 56.4 47.2 50.8
Money market fund shares 21.0 28.8 27.5 21.6 27.7
Security repurchase agreements 10.9 10.1 8.5 8.5 8.5
Credit market instruments 3,174.2 3,299.6 3,373.9 3,451.3 3,551.0
     Open market paper 40.9 29.7 43.6 46.7 42.2
     U.S. government securities 532.6 549.8 541.8 522.7 522.0
          Treasury 156.6 175.4 180.9 168.6 182.9
          Agency- and GSE (1)-backed securities 376.0 374.4 360.9 354.1 339.1
     Municipal securities 112.3 121.8 131.5 141.6 147.8
     Corporate and foreign bonds 2,030.2 2,117.3 2,162.2 2,223.0 2,292.3
     Other loans and advances 140.7 148.6 150.4 153.9 161.9
     Mortgages 317.5 332.5 344.4 363.2 384.8
Corporate equities 1,371.6 1,355.5 1,502.7 1,743.4 1,798.4
Mutual fund shares 186.7 184.8 201.7 235.8 246.4
U.S. direct investment abroad 46.3 54.2 67.0 65.5 67.0
Miscellaneous assets 305.6 353.4 377.0 404.1 477.2

(1) Government-sponsored enterprise.

Source: Board of Governors of the Federal Reserve System, June 11, 2015.

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Premiums by line

Measured by premiums written, annuities are the largest life/health product line, followed by accident and health, and life insurance. 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.

 
Direct Premiums Written By Line, Life/Health Insurance Industry, 2014-2016

($000)

  2014 2015 2016
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 $205,448,744 31.0% $206,964,955 30.4% $197,026,489 28.8%
     Group annuities 119,716,314 18.1 127,014,242 18.6 129,332,100 18.9
   Total $325,165,057 49.1% $333,979,197 49.0% $326,358,589 47.8%
Life            
     Ordinary life 132,934,797 20.1 136,272,087 20.0 139,782,420 20.5
     Group life 34,378,068 5.2 37,823,537 5.6 36,427,891 5.3
     Credit life (group and individual) 960,229 0.1 917,663 0.1 828,632 0.1
     Industrial life 142,962 (2) 131,020 (2) 129,303 (2)
    Total $168,416,057 25.4% $175,144,308 25.7% $177,168,246 25.9%
Accident and health (3)            
     Group 98,088,456 14.8 108,826,002 16.0 115,379,861 16.9
     Other 69,655,745 10.5 62,218,089 9.1 63,637,078 9.3
     Credit 954,502 0.1 907,768 0.1 822,146 0.1
     Total $168,698,703 25.5% $171,951,859 25.2% $179,839,084 26.3%
All other lines 3,482 (2) 3,383 (2) 3,315 (2)
Total, all lines (4) $662,283,299 100.0% $681,078,747 100.0% $683,369,233 100.0%

(1) Before reinsurance transactions.
(2) Less than 0.1 percent.
(3) Excludes accident and health premiums reported on the property/casualty and health annual statements.
(4) Excludes deposit-type funds.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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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.

 
Credit Life, And Credit Accident And Health Insurance Direct Premiums Written, 2007-2016

($000)

Year Credit life Credit accident and health
2007 $1,631,338 $1,407,579
2008 1,563,206 1,251,052
2009 1,248,117 964,004
2010 1,247,848 930,578
2011 1,226,910 930,094
2012 1,159,524 957,294
2013 977,557 968,691
2014 961,247 955,261
2015 915,437 910,645
2016 831,283 829,033

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Life Insurance/Annuities By Direct Premiums Written, 2017

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 MetLife Inc. $86,621,636 13.6%
2 Prudential Financial Inc. 47,465,693 7.4
3 New York Life Insurance Group 31,852,412 5.0
4 Principal Financial Group Inc. 28,153,239 4.4
5 Massachusetts Mutual Life Insurance Co. 24,735,091 3.9
6 Jackson National Life Group 22,439,071 3.5
7 American International Group 21,465,665 3.4
8 Transamerica 21,317,714 3.3
9 AXA 21,290,299 3.3
10 Lincoln National Corp. 20,397,394 3.2

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

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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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.

Independent insurance agents have held over half of the individual life insurance market over the 10 years from 2008 to 2017, but have lost some ground to affiliated agents and direct response companies, as shown in the chart below.

 
Life Individual Market Share By Distribution Channel, 2008 And 2017

(1) Includes brokers, stockbrokers and personal producing general agents.
(2) Includes career, multiline exclusive and home service agents.
(3) No producers are involved. Excludes direct marketing efforts involving agents.
(4) Includes financial institutions, worksite and other channels.

Source: LIMRA’s U.S. Individual Life Insurance Sales survey results and LIMRA estimates.

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Online sales

Almost half of consumers of all ages (45 percent) would go online to find more information on life insurance, but would complete the purchase with an agent or financial advisor, according to the 2018 Insurance Barometer Study survey by the Life and Health Insurance Foundation for Education (LIFE) and LIMRA. Over half of Millennials would research life insurance online, but they would purchase life insurance from a financial professional.  Gen-Xers are the group most likely (32 percent) to research and complete the purchase entirely online.

 
WORKSITE LIFE INSURANCE SALES BY LINE OF BUSINESS, 2014

(1) Short-term and long-term disability.

Source: Eastbridge Consulting Group, Inc.

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  • 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.
  • Worksite sales of life and health insurance totaled $6.89 billion in 2014, up about 3.7 percent from 2013.

 
Top 10 Writers Of Individual Life Insurance By Direct Premiums Written, 2016

($000)

Rank Group/company Direct premiums written (1) Market share
1 Northwestern Mutual Life Insurance Co. $10,100,910 8.1%
2 New York Life Insurance Group 6,923,144 5.6
3 MetLife Inc. 6,633,270 5.4
4 Lincoln National Corp. 6,205,251 5.0
5 Prudential Financial Inc. 5,362,282 4.3
6 Massachusetts Mutual Life Insurance Co. 5,178,666 4.2
7 John Hancock 4,561,320 3.7
8 State Farm Mutual Automobile Insurance 4,348,491 3.5
9 AEGON 4,331,917 3.5
10 Aflac Inc. 3,321,541 2.7

(1) Before reinsurance transactions. Based on U.S. total, includes territories. Excludes annuities, accident and health, deposit-type contract funds and other considerations.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Group Life Insurance By Direct Premiums Written, 2016

($000)

Rank Group/company Direct premiums written (1) Market share
1 MetLife Inc. $5,974,683 18.7%
2 Prudential Financial Inc. 3,202,585 10.0
3 Securian Financial Group 2,386,751 7.5
4 New York Life Insurance Group 1,870,870 5.9
5 Cigna Corp. 1,821,564 5.7
6 Massachusetts Mutual Life Insurance Co. 1,480,022 4.6
7 Unum Group 1,454,397 4.6
8 Hartford Financial Services 1,263,003 4.0
9 Aetna Inc. 955,344 3.0
10 Meiji Yasuda Life Insurance Co. 851,828 2.7

(1) Before reinsurance transactions. Based on U.S. total, includes territories. Excludes annuities, accident and health, deposit-type contract funds and other considerations.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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