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Life Health > Life Insurance

Accounting Practices Positively Impacts Capital, Surplus of Insurers in SNL Survey

By Warren S. Hersch

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State-permitted and prescribed accounting practices positively impacted the capital and surplus reported by 85% of the life and P&C insurers surveyed by SNL Financial.

The data from SNL Financial, Charlottesville, Va. reveals the capital and surplus among 17 of 20 insurers were positively impacted as a result of the insurers using permitted and prescribed accounting practices. These practices are accounting procedures allowed or mandated, respectively, for calculating net income and surplus for insurers domiciled in the state.

Positive impact indicates that the permitted or prescribed accounting practices resulted in an increase in the reported capital and surplus. The data gathered by SNL is based as-reported annual NAIC statutory statement filings of U.S. insurers.

AEGON NV reported the largest positive percentage change (289%) in capital and surplus in 2011. The company’s reported capital and surplus in 2011 was $5.12 billion, as compared to $4.3 billion in 2010.

Benefiting from the second, third and fourth largest impacts on capital and surplus in 2011 (in percentage terms) were American Life Insurance Company (a MetLife Company) at 21.6%; Hartford Life & Annuity Insurance Co., (a unit of Harford Financial Services) at 11.2%; and Erie Insurance Exchange (a unit of Erie Insurance Group) at 10.6%.

These three companies reported capital and surplus in 2011 of 3.31 billion, $3.93 billion and $5.17 billion, respectively, in 2011. These figures compare to reported capital and surplus in 2010 of, respectively, $4.32 billion, $4.06 billion and $5.07 billion.

The three insurers in the SNL survey that suffered a negative impact on capital and surplus included Teachers Insurance & Annuity Associates (TIAA-CREF), Jackson National Life and New York Life Insurance & Annuity Corp. The negative impact in percentage terms for the three companies totaled -12.5%, -10.8% and -5.1%, respectively.

The reported capital and surplus of the three companies in 2011 totaled $27.13 billion, $3.65 billion and $5.79 billion, respectively.

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