The Industry In 2003: Strong In Some Areas, Less So In Others
Just how life insurers measured up in 2003 depends on the measuring stick you use.
In categories such as net gain, net admitted assets and in-force totals, the new mark on the wall recorded a dramatic growth spurt. However, the premium income categories suggested a plateau had been reached.
Net Admitted Assets
Net admitted assets for the top 300 life insurers increased 14.2% to $3.77 trillion in 2003 compared with $3.3 trillion in 2002. Thirty-one companies experienced increases in net admitted assets of over 30%; 14, over 50%; and 4 companies, over 100%.
Assurity Life Ins. Co. witnessed a whopping 510% increase to $1.06 billion in 2003 compared with $174 million in 2002. Another insurer that added asset muscle is Federal Kemper Life Assurance Co., whose net admitted assets grew to $5.8 billion in 2003, up from $2.1 billion in 2002.
Two other companies, Washington National Insurance Corp. and Scottish Re U.S., Inc., also turned in 100%-plus increases. Washington Nationals net admitted assets grew 124% to $2.04 billion from $911 million and Scottish Re U.S.s tally grew to $1.07 billion from $528 million.
Some 77 companies saw net admitted assets increase between 15-29%, and 37 companies grew in the 10-15% range.
Thirteen companies experienced declines in net admitted assets including a 42.7% drop posted by the U.S. business of Canada Life Assurance Co.; a 22.2% drop by Business Mens Assurance Co. of America; a 19.3% decline by Hartford Life Group Ins. Co.; and a 10.1% reduction by Clarica Life Ins. Co. (U.S.).
Net Premium Income
Net premium income, which starts with direct written premium and then takes into account reinsurance assumed and ceded, inched up 1% in 2003 over 2002. The growth was a slightly better 3% for direct written premium, a measure that looks only at what companies write.
The disparities between the two measures sometimes can be startling.
For instance, regarding net written premium, Federal Kemper Life Assurance Co. posted a 2,302% increase; Berkshire Hathaway Life Ins. Co., a 1,801% increase; and, Loyal American Life Insurance Co., a 513% increase. But if direct written premium is used, Federal Kemper would have shown a 1% increase; Berkshire Hathaway, a 1,628,602% increase; and, Loyal American, a decline of 5.75%.
In the case of Federal Kemper net premium was bolstered by reinsurance assumed which increased over 13 million percent. Berkshire Hathaway Lifes increase in net premium was almost entirely from growth in direct written premium. Loyal Americans net premium was bolstered by an 89.2% decline in reinsurance ceded.
Other companies that had significant disparities in year-over-year percentage changes between direct written and net premiums include: AIG Annuity Ins. Co., Assurity Life Ins. Co., Aviva Life Ins. Co., Hartford Life Ins. Group., Southland Life Ins. Co., Swiss Re Life & Health America, Inc. and Washington National Ins. Co.
That said, most insurers had minimal or no discrepancies between direct and net premiums. Additionally, the year-over-year percentage changes suggest that 10 companies saw increases of between 50-100%; 23 companies had increases between 30-50%; 30 companies saw growth of between 15-29%; and, 28 insurers witnessed growth of between 10-15% in net written premium.
In spite of some handsome increases, 119 companies saw drops in net premium written. If direct written premiums are used as a measure, the top 300 fared slightly better with only 107 companies posting declines.
Net Investment Income
Net investment income for the top 300 companies chugged along with a 3% increase in 2003 over 2002.
Seven companies posted gains of 100% or better in the year-over-year comparisons. They are: Sun Life Assurance Co. of Canada (U.S.), 496%; Assurity Life Ins. Co., 494%; Chase Life & Annuity Co. of N.Y., 371%; Blue Cross & Blue Shield of Florida, 276%; Washington National Insurance Company, 175%; Scottish Re U.S., Inc., 120%; and, Life Insurance Company of the Southwest, 101%. The most common reason for these sizeable jumps was increased income from government and affiliate bonds.
Other companies experienced double-digit declines in net investment income in 2003 over 2002. United Insurance Company of America dropped 71%; Scottish Re Life, 64%; Country Investors Life Assurance Company, 48%; Allmerica Financial Life & Annuity, 42%; Combined Insurance Company of America, 41%; Jefferson National Life Insurance Company, 32%; and, Kemper Investors Life Insurance Company, 29%.
Among the reasons for the decline in investment income: drop in income from common stock and bonds of affiliates and non-affiliates; and income from derivatives.
Individual Life and Annuity Premiums
For the top 300 companies in both the individual life premiums and the individual annuity premium categories, there were slight declines of 1% in 2003 compared with 2002.