The U.S life and annuity industry’s total income increased by 8.5% in 2018, according to a recent report by A.M. Best, which attributed the rise to a $54.1 billion increase in other income.
Analysts explained that this boost offset modest increases in premium and annuity considerations and net investment income.
The report found that the growth in total income was due to $50 billion of reserve adjustments on reinsurance ceded at American General Life Insurance Company, Voya Insurance, Delaware Life Insurance Company and Hannover Life Reassurance Company of America.
These adjustments were related to the execution of Modified Coinsurance Agreements and the recapture of retrocessions from foreign affiliates, A.M. Best said.
The rating agency’s data also shows that the total incurred benefits of the U.S life/annuity industry rose 12.3% from the prior year due to a $76 billion increase in surrender and other benefits.
Meanwhile, pretax net operating gain for the industry declined to $44.3 billion in 2018, down 19.7% from the prior year.
Additionally, an $8.1 billion reduction in federal and foreign taxes and a $2.4 billion reduction in realised capital losses resulted in total industry net income of $36.7 billion remaining relatively flat with the prior year.
A.M. Best’s data was derived from companies’ annual statutory statements that were received by Mar. 14, 2019, representing an estimated 93% of total industry premiums and annuity considerations.
