There is more good news for the life insurance industry as new numbers frame how far the industry has bounced back from the woes spurred by the financial crisis. According to 2009 statutory financial results for top-tier life insurers and life groups from SNL Financial, Charlottesville, Va., U.S. life insurers recovered all of the capital and surplus they lost amid the global financial crisis over the course of 2009.
But the industry's results for the full year were not without mention of accounting pronouncements, certain noteworthy reinsurance transactions, and continued investment volatility, said the report.
SNL’s data reflects manual adjustments performed on the life industry data currently available on SNL platforms. Policyholders' surplus for 96.8% of the top-tier U.S. life insurance companies and/or groups covered by SNL Financial totaled $289.7 billion as of Dec. 31, 2009. That marks a 14.8% increase from industry surplus at year-end 2008, a year in which surplus declined by 6.2% to $252.5 billion.
Industry net income represented the single-largest factor in the 2009 improvement. The industry recorded a $21.1 billion profit as compared to a 2008 loss of $51.8 billion.
SNL says the most noteworthy change evident in a cursory review of industry statutory financials for 2009 was the sharp decline in premiums and annuity considerations. At $511.2 billion, the 2009 sum marked a 19% decline from 2008 levels and it represented the first time that revenue measure fell on a year-over-year basis since 2003.
The financial crisis may be in the rear-view mirror, but the industry continued to experience lingering after-effects of the 2008 shock. Net investment income fell by 3.3% from 2008 levels as the net yield on invested assets fell by 28 basis points to 5.11% and the industry recorded $28.7 billion in net realized capital losses. It was a third consecutive year of net realized capital losses for the industry, but the 2009 result marked an improvement from the $50.5 billion in losses posted in 2008 - more than half of which were attributable to the American International Group life group alone.
It stands to reason that the noise present in the industry's 2009 results will become more muted as the distance from the global financial crisis increases, notes SNL. But it would appear that some groups are better positioned than others to generate results that hold up well relative to longer-term trends rather than just in comparison to the crisis-linked effects.