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Investment Losses Hurt Life Insurers' 2018 Earnings: Fitch

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Big U.S. life insurers’ operating earnings continued to improve in 2018, but their overall net income fell sharply, according to data from Fitch Ratings.

Fitch put Generally Accepted Accounting Principles (GAAP) earnings data from 15 large, publicly traded U.S. life insurers in the analysis.

(Related: Analysts Grade Variable Annuity Issuers’ Stormproofing)

Those insurers reported a total of $25.4 billion in earnings from operations for 2018, up 15% from the insurers total operating earnings for 2017.

But the insurers’ total net income fell 18%, to $22 billion.

Net income, or bottom-line income, includes the impact of factors such as taxes, unusual charges and investment performance.

About $3.7 billion of the 15 insurers’ $4.8 billion drop in total net income between 2017 and 2018 was due to realized investment losses.

The net realized investment losses were due largely to derivatives-related items, according to Nelson Ma and David Gorak, the Fitch analysts who prepared the analysis.

“Credit-related impairments remained modest relative to historical averages,” the analysts wrote in a comment on the earnings data.


A copy of the Fitch data is available, behind a paywall, here.

— Read Lincoln Execs Are Happy, and 4 More Life & Annuity Earnings Updates, on ThinkAdvisor.

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