US Life and Annuity Insurance Industry Reports 7% Growth

Author: Dylan Bailey Updated: 09-20-2024 08:16 AM

Strong Financial Performance in the U.S. Life and Annuity Sector

Net income for the U.S. life and annuity (L/A) insurance industry has shown remarkable strength, increasing by 7.1% during the first half of 2024 compared to the previous year, amounting to an impressive $14.1 billion. This notable growth can be attributed largely to a significant decrease in realized capital losses, as revealed by a recent report from AM Best.

Insights from AM Best's Special Report

The recent Best’s Special Report, titled “First Look: Six-Month 2024 US Life/Annuity Financial Results,” provides in-depth analysis of this sector. The data presented in the report is derived from the interim statutory statements of L/A companies for six months ending in 2024. According to the report, it represents approximately 99% of total industry premiums and annuity considerations.

Industry Income and Expense Overview

The total income for the L/A industry has experienced a healthy increase of 7.7% from the first half of 2023, reaching $578.3 billion. This rise is bolstered by a 10.6% increase in premiums and annuity considerations, as well as a 10.0% rise in net investment income. Yet, it is important to note that total expenses have also escalated, rising nearly 10%, primarily due to a $55.6 billion surge in surrender and other benefits.

Understanding the Pretax Net Operating Gain

Despite the growth in income, the industry recorded a pretax net operating gain of $21.8 billion. This figure denotes a 26% decline compared to the same period last year. However, the 80% reduction in net realized capital losses significantly cushioned the overall impact, allowing the net income to rise by 7.1% compared to the prior-year period.

Future Outlook for the L/A Insurance Industry

The U.S. life and annuity insurance industry is positioned for continued growth as it manages expenses and navigates the challenges of the financial markets. With improved net income figures, the sector reflects resilience and adaptability in fluctuating economic times, drawing investor interest and confidence.

About AM Best

AM Best is recognized as a global credit rating agency and a leading publisher of news and data analytics specifically focused on the insurance industry. With headquarters located in the United States, AM Best operates in over 100 countries, supported by regional offices in key cities worldwide including London, Amsterdam, Dubai, Hong Kong, Singapore, and Mexico City. The company plays a critical role in assessing the financial health and performance of insurance firms.

Frequently Asked Questions

What caused the growth in U.S. life and annuity insurance net income?

The growth was largely driven by lower realized capital losses and an increase in premiums and net investment income.

How much did total income increase in the L/A industry?

Total income increased by 7.7%, reaching $578.3 billion in the first half of 2024.

What does the AM Best report cover?

The AM Best report covers six-month financial results for the L/A industry, detailing income, expenses, and net capital losses.

What was the pretax net operating gain reported?

The pretax net operating gain was $21.8 billion, reflecting a 26% decline from last year.

Where is AM Best headquartered?

AM Best is headquartered in the United States and operates in more than 100 countries around the globe.

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