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.
? Special Markets increased operating revenue by 8% to $1.4 billion, compared with $1.3 billion in 2005.
? Through the AARP programs, New York Life is America’s leading direct marketer of life insurance, and in 2006 launched a new program offering lifetime income annuities to AARP members.
? New York Life is also the largest underwriter of professional association insurance programs in the United States, covering members of more than 500 associations across the country.
? The company’s long term care insurance operation ranks as the seventh largest provider in this field, according to an industry source, with sales up 15% in 2006, versus industry sales that declined by 8%.
New York Life Investment Management
New York Life Investment Management ranks among the largest asset management firms in the United States. Through its multiple boutique investment structure, New York Life Investment Management delivers superior investment performance through an array of products designed for both institutional and retail clients. With its MainStay Investments brand, New York Life Investment Management distributes some of the most highly regarded mutual funds and wrap accounts in the industry. And its Guaranteed Products area provides guaranteed investment contracts, funding agreements and other products that leverage New York Life’s triple-A credit rating. New York Life Investment Management achieved strong performance in 2006 through strategic expansion of its product shelf and distribution channels. Highlights from 2006 included:
? The acquisition of Institutional Capital Corporation (ICAP), a premier value equity institutional investment firm based in Chicago, Illinois.
? An 18% increase in assets under management over 2005, exceeding $235 billion by year-end.
? Total sales climbed to a record $28.2 billion, up 27% over 2005.
New York Life International
New York Life International has operations in nine markets including China, Hong Kong, India, the Philippines, South Korea, Taiwan, Thailand, Argentina, and Mexico. New York Life International operations remain in growth mode, expanding rapidly in a number of the world’s most attractive emerging markets, including India and China. Key highlights of 2006 were:
? Operating revenue grew to $2.3 billion in 2006, up 24% over the prior year.
? Insurance sales increased 26% to $729 million, driven primarily by exceptional growth in the company’s operations in India, Mexico and Hong Kong.
? Max New York Life, the company’s joint venture in India, virtually doubled insurance sales over the prior year. It grew the number of licensed agents in India to nearly 18,000 and expanded its network of offices to 90 in 55 Indian cities.
? Insurance sales in China grew 70% as we entered four new cities, including the provincial capital of Nanjing.
? Overall, International’s career agent sales force continues to grow, with more than 29,000 agents registered in the nine markets.