OLDWICK, N.J.--(BUSINESS WIRE)--The U.S. life/health (L/H) industry reported a 22.8% year-over-year increase in pretax net operating income to $66.2 billion in 2016, the highest level of the last five years; however, due to realized capital losses of $11.2 billion, compared with $3.3 billion in losses in 2015, net income was driven down 3.1% year-over-year to $38.8 billion. These results are detailed in a new Best’s Special Report, titled, “A.M. Best First Look– 4Qtr 2016 U.S. Life/Health Financial Results,” and the data is derived from companies’ statutory statements that were received as of March 28, 2017. These financial results represent approximately 97% of the total U.S. L/H industry’s premiums and annuity considerations.
Despite the decline in net income, capital and surplus for the L/H industry reached a record $378.7 billion as of year-end 2016. A significant improvement in unrealized gains, increased contributed capital and a boost in other surplus gains more than offset the change in asset valuation reserve and the 31% increase in stockholder dividends. The L/H industry saw continued growth in invested assets, reaching a record $3.9 trillion as of year-end 2016. The proportion of invested assets allocated to bonds declined slightly with new money allocations increasing exposure to commercial mortgage loans and other invested assets. In addition, within the fixed income portfolio, interest in private placements, NAIC-2 rated bonds, and structured securities—particularly collateralized loan obligations (CLOs)—continues to increase. Total income for the L/H industry in 2016 was $842.2 billion, and remained virtually flat compared with 2015.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=260154.
A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.