What You Need to Know
- Life subsidiaries reduced dividend payments to parent companies.
- Total adjusted capital increased.
- Return on total adjusted capital fell.
The COVID-19 pandemic contributed to a big drop in 2020 in the statutory performance of U.S. life and annuity issuers, according to analysts at Fitch Ratings.
Total net gains from operations at the life insurers Fitch rates fell to $27 billion last year, down 40% from the total for 2019.
David Gorak and Douglas Baker, the analysts, have included that figure in a special report based on a review of company financial reports for 2020.
The analysts prepared the report to look at the insurers’ statutory capital and related performance measures.
The net gains from operations figure includes revenue an insurer gets from premiums, revenue, net investment income and capital gains and losses, minus benefits payments, transfers on account of policy loans, state and federal taxes, changes in reserves, and other costs.
The 2020 decrease was “largely due to higher claims paid, primarily as a result of increased mortality from COVID-19,” the analysts write.
Two Kinds of Accounting
Publicly traded life insurers and some other life insurers prepared their financial reports using the same U.S. Generally Accepted Accounting Principles (GAAP) rules that apply to all U.S. companies with publicly traded stock.