New York Life Insurance Company, New York, N.Y., set new records in 2006 for sales of insurance and investment products, as well as reached new highs in operating earnings, surplus, operating revenue, and assets under management. The company’s net income reached $2.3 billion in 2006, compared with $855 million in 2005. The rise in net income was the result of strong operating earnings coupled with realized capital gains that included a $1,011 million one-time gain from a change in accounting for a company investment.
Among the Significant Records New York Life Achieved in 2006:
? Operating earnings increased 17% to $1.1 billion in 2006, from $934 million in 2005.
? Operating revenue grew more than $1.2 billion, or 11%, to $12.3 billion in 2006.
? Surplus and Asset Valuation Reserve grew $1 billion to $13.9 billion.
? Total insurance sales exceeded $2.8 billion in 2006, an increase of 28%.
? Total investment sales increased more than $6.6 billion, or nearly 24%, to $34.9 billion.
? Assets Under Management increased by more than $39 billion to nearly $265 billion in 2006.
Sy Sternberg, chairman and chief executive officer, said, “The company’s operations had a year for the record books in 2006. Our broad array of products, including traditional life insurance products, lifetime income products, long term care insurance, and institutional and retail investment products and services, are clearly meeting the varied needs of our policyholders and clients. The robust growth achieved in 2006 reflects outstanding execution of our strategy, including our focus on life insurance, on career agents, on remaining a mutual company, and of course, maintaining financial strength, a hallmark of our company. Surplus reached a new high of $13.9 billion, providing a superb cushion of safety and security for our policyholders.”
Operating earnings, the company’s measure to track profitability from ongoing operations, increased 17% to a record $1.1 billion in 2006, compared with 2005 operating earnings of $934 million. Significantly, earnings from International and New York Life Investment Management, both of which represent future earnings growth engines, exceeded expectations in 2006. The company’s GAAP net income (including realized capital gains and losses) totaled $2.3 billion in 2006, compared with $855 million in 2005. These results included net realized capital gains of $1,205 million in 2006, compared with net realized capital losses of $180 million in 2005.
Record Sales and Record Operating Revenue
Insurance sales increased 28% in 2006, to $2.85 billion, propelled by strong sales in the United States of life insurance (up 24%) and lifetime income annuities (up 45%) and by a 26% increase in sales of life insurance in the company’s International operations. New York Life is the largest seller of life insurance and lifetime income annuities in the United States, according to an industry source. In addition, sales of life insurance through AARP increased 22% in 2006.
Investment sales increased nearly 24%, to $34.9 billion in 2006, driven by a 27% increase in sales at New York Life Investment Management, which saw particularly strong sales in its Institutional, retirement services, and retail mutual fund businesses.
New York Life’s operating revenue of $12.3 billion was up 11%, a new company milestone, led by a 24% increase in operating revenue from International operations.
Review of Businesses
U.S. Insurance Operations
The company’s U.S. Insurance Operations include its Life and Annuity and Special Markets business units. Life and Annuity is the company’s largest revenue generator, selling a full array of products in the United States including individual, bank- and corporate-owned life insurance, lifetime income annuities and a variety of variable and fixed investment annuities. Key highlights of 2006 were:
? Operating revenue in Life and Annuity increased 10% to $7.8 billion, compared with $7.1 billion in 2005.
? New York Life continued its leadership in the Million Dollar Round Table, the industry’s most prestigious professional organization for agents, for the 52nd consecutive year. The company had 2,331 agents achieve this recognition in 2006, nearly a third of New York Life’s active field force in the U.S.