MARCH 13, 2023 08:24 AM (EDT)
Best’s Market Segment Report: U.S. Life/Annuity Insurers Flex Muscles in 2022, Remain Well-Positioned for 2023 Challenges
|Michael Porcelli, FSA |
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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 13, 2023 08:24 AM (EDT)
Despite equity market volatility, inflationary pressure and rapid interest rate hikes, U.S. life insurance and annuity writers posted a 17% increase in net income to $31.7 billion through third-quarter 2022, as compared with the same prior year period, driven mainly by a 7% rise in premium and annuity considerations, according to a new AM Best report.
The annual Review & Preview Best’s Market Segment Report, “US Life/Annuity Insurers Well-Positioned for 2023 Challenges,” states that the life/annuity segment remains well-capitalized to face ongoing economic uncertainty. Statutory capital and surplus dropped 2.1% through the first nine months of 2022 from year-end 2021, but the report notes that most companies had bolstered their balance sheets in previous years. Unrealized losses spiked significantly to $20.1 billion through third-quarter 2022, but in the near term and despite the capital decline, most insurers can hold those assets driving unrealized losses to maturity and will likely not be forced to sell to meet liquidity needs. AM Best expects full-year 2022 pre-tax net operating gains to close out in a favorable position, with capital and surplus to rebound in 2023 to above 2021 levels.
“Most companies survived the worst of the pandemic with operating results moving in tandem with the ebb and flow of pandemic-related mortality claims but remaining favorable for the most part,” said Michael Porcelli, senior director, AM Best. “Russia’s invasion of Ukraine, inflation, rising interest rates and the threat of a recession caused fluctuations in investment results over the year. However, premium growth continues as the need for protection was acutely highlighted.”
Other takeaways from the report include:
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=329614 .
A video discussion with Edward Kohlberg, director, AM Best, about this report is available at http://www.ambest.com/v.asp?v=ambrpla323 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.