New SNL Data Shows Declining Profitability for U.S. Life Insurance Industry in Second-Quarter 2010

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The industry reported a net loss and a decrease in net gains from operations as insurers sought to strengthen reserves.

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Reserve strengthening significantly impacted performance in the second quarter, especially at many of the largest annuity writers, who reacted to market turmoil by increasing reserves on their guarantees.

An SNL Financial analysis of second-quarter 2010 statutory insurance data reveals declining profitability for the U.S. Life industry, which recorded a net loss of $900.3 million, down from a net income of $8.9 billion in second-quarter 2009.

SNL’s analysis, which includes data from 850 statutory insurance filing companies, shows that quarterly net gains from operations declined by 78% to $6.2 billion as a result of an incremental increase in reserves of $25.8 billion compared to the prior-year period.

As Jon Wright, SNL's Director of Insurance, notes: "Reserve strengthening significantly impacted performance in the second quarter, especially at many of the largest annuity writers, who reacted to market turmoil by increasing reserves on their guarantees."

On a positive note, U.S. Life companies reported vastly improved capital and surplus numbers of $294.1 billion in second-quarter 2010, up 17% from second-quarter 2009, as companies continue to report greater invested asset values. Quarterly net premiums and annuity considerations remained flat, however total revenue was up 3% from the prior-year period due to increased investment income.

SNL’s statutory data includes detailed financial data on each filer, reinsurance, investment and loss reserve schedules, data by state and line of business and hundreds of ratios, snapshots and analytics, available exclusively as part of SNL Unlimited service for Financial Institutions. SNL is the only information provider to offer clients a comprehensive insurance product, linking statutory data with public company data, mergers & acquisitions data, proprietary news, documents and more. To find out more about SNL Unlimited, contact sales(at)snl(dot)com or call 866.296.3743.

About SNL Financial
SNL Financial is a leading provider of financial information on more than 3,300 public companies and 50,000 private companies in the business sectors critical to the global economy: Banking, Financial Services, Insurance, Real Estate, Energy and Media & Communications. The SNL information service integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit http://www.snl.com.

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Monica Jenkins
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+1.434.951.6951
mjenkins(at)snl(dot)com

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