The U.S. life/annuity (L/A) industry’s net income in the first quarter of 2019 rose sharply over the prior-year period, to $14.9 billion from $3.2 billion, due mainly to a significant decline in total expenses, according to A.M. Best, the ratings agency.
Those preliminary financial results are detailed in a new Best’s Special Report, titled, “First Look – Three Month 2019 Life/Annuity Financial Results.” The data comes from companies’ three-month 2019 interim period statutory statements, which were received by May 29, 2019 and represent an estimated 93% of total industry premiums and annuity considerations.
The L/A industry’s total income for the first three months of 2019 declined slightly by 1.3% from the prior-year period, as net investment income remained unchanged and a $37.7 billion increase in premiums and annuity considerations was negated by a $40.7 billion decline in other income, the report said.
However, a $12.8 billion decrease in incurred benefits, coupled with a $9.8 billion reduction in general insurance and other expenses, and an $8.5 billion reduction in net transfers to separate accounts drove a $13.6 billion reduction in total expenses.
Despite relatively flat income, the decline in expenses resulted in pre-tax net operating gain doubling from the prior-year period to $21.9 billion. A $2.0 billion increase in federal and foreign taxes was offset by a $2.8 billion reduction in net realized capital losses, boosting the total industry’s net income.
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