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U.S. Life Insurers Looked Great in 2021: Fitch

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What You Need to Know

  • COVID-19 led to a big increase in mortality.
  • Net investment income grew more than life insurance claims.
  • This year, an increase in interest rates could help insurers' investment returns.

The COVID-19 pandemic led to a historic spike in U.S. life insurance claims in 2021, but the life insurers’ Fitch Ratings did well.

The rating agency says total adjusted capital at the life insurers it rates increased 9.2% between the end of 2020 and 2021, to $478 billion.

That rate of growth compares with a five-year average of 5.3%.

Net gains from operations — a measure of profitability — increased to $46 billion, from $27 billion in 2020.

Life insurers’ strong operating performance and capital growth helped increase their total risk-based capital ratio to 454% at the end of 2021, from 436% earlier.

An RBC ratio is an indicator that insurance regulators use to estimate whether an insurer has enough financial resources to meet its insurance and annuity benefits obligations.

This year, geopolitical uncertainty could hurt life insurers’ investment returns, but the Federal Reserve Board is trying to push interest rates higher, and that could help insurers’ investment returns, Fitch says.

(Image: Shutterstock)


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