JUPITER, Fla.- Unlike some of the nation’s largest banks, many large life and annuity insurers, including MassMutual, Northwestern Mutual, New York Life, Principal Life and TIAA, receive top grades from Weiss Ratings, the nation’s only provider of independent insurance company ratings.
However, Weiss Ratings, in a list released June 10, also found that many smaller insurers are vulnerable to financial difficulties based on Weiss Ratings’ analysis of each insurer’s risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, asset and premium growth, plus other factors.
Among the 887 U.S. life and annuity insurers covered, 80 insurers, controlling $1.3 trillion, or 26.6% of the industry’s assets, are viewed as strong enough to be recommended to consumers, receiving a rating of B+ (good) or higher, while 74 companies controlling only $22.2 billion, or 0.5% of the industry’s total assets, are considered vulnerable, meriting a Weiss Financial Strength Rating of D+ (weak) or lower.
“The bulk of the assets in the life and annuity insurance industry are controlled by relatively strong and stable institutions, making it stronger overall than the banking industry,” said Martin D. Weiss, president of Weiss Ratings. “Although profitability in the industry fell during the debt crisis and then recovered last year, the strongest insurers remained financially healthy throughout the market turmoil. But that does not preclude future failures among the weakest, especially if the economy experiences another downturn.”
Life and annuity insurers reported a dramatic turnaround in profits in 2009, earning $21.1 billion compared to a $51.8 billion loss in 2008. This improvement was primarily due to a $45 billion decrease in the amount of additional reserves that were set aside as well as a decrease in net realized losses on investments, which dropped from $50.5 billion in 2008 to $28.7 billion in 2009.
Below are the nation’s life and annuity insurers with $10 billion or more in assets receiving a Weiss Rating of B+ or higher:
–Teachers Insurance & Annuity Association of America, New York
–Northwestern Mutual Life Insurance Company, Milwaukee
–Massachusetts Mutual Life Insurance Company, Springfield, Mass.
–Principal Life Insurance Company, Des Moines, Iowa
–New York Life Insurance Company, New York
–Pacific Life Insurance Company, Newport Beach, Calif.