Three companies — AIG, MetLife and Prudential — accounted for the largest share of the third quarter earnings increase.

U.S. publicly held life insurers collectively reported a 188 percent gain in net income in the third quarter compared to the same period last year, according to a new report.

Moody’s Investors Service discloses this finding in a November 2013 Special Comment survey. The research reviews third quarter financial results of 19 U.S. publicly traded life insurers.

Attributing the earnings increase to “positive performance all around,” the Moody’s report pegs third quarter net income for the insurers at $6.4 billion, up from $2.2 billion recorded for the year-ago period. Three companies — AIG (Retirement and Life segments), MetLife and Prudential — accounted for the largest share of the increase; the remaining companies enjoyed a 10 percent earnings rise compared to the third quarter of 2012.

Moody’s also reports these results for the tracked U.S. life insurers:

  • Year-over-year shareholders’ equity edged down 9 percent by nearly $24 billion to $246 billion. Contributing to the decline was a $30 billion drop in accumulated other comprehensive income (AOCI), a subsection of equity in company balance sheets where “other comprehensive income” is aggregated.
  • Quarter-over-quarter and year-over-year sales of fixed annuities increased by 91 percent and 72 percent, respectively. Most notably, AIG (Life and Retirement) reported sales of $1.2 billion for the quarter, up from $192 million during Q3 2012.
  • Overall individual life sales for the group were up by 6 percent in Q3 2013 compared to Q3 2012. However, more companies posted lower versus higher sales. On the positive side, Prudential’s sales rose 68 percent, reflecting the acquisition of The Hartford’s life insurance business.
  • Helped by higher interest rates, year-over-year fixed annuity sales rose by 72 percent compared to Q3 2012; however, variable annuity sales dipped 20 percent compared to Q3 2012. Individual life sales were up 6 percent relative to the prior-year period.
  • Operating earnings reported by the group were up 25 percent to $7.4 billion for Q3 2013 compared to $6 billion in Q3 2012.

“The improvement in quarterly operating earnings on a year-over-year basis was driven by a continuation of factors that have been in play over the past few quarters,” the report states. “These include greater fee income on the back of higher equity-driven account balances, an uptick in interest rates, lower impairments (although somewhat offset by lower portfolio yields) and some positive DAC unlocking related to variable annuities and/or life insurance, as equity markets finished Q3 2013 stronger relative to the prior-year period.

“However, still-elevated benefit ratios and the distractions of implementing health care reform continue to challenge earnings growth for insurers focused on health-related products,” the report adds.