Amidst Covid-19 Pandemic, the U.S. life/annuity (L/A) industry posted a $23.1 billion net income loss in the first quarter of 2020, driven mainly by a 51% increase in expenses over the same prior-year period, according to report by AM Best .
According to the report, the L/A industry saw a $23.7 billion increase in total income to $230.4 billion for the period.
However, a $94.1 billion increase in total expenses, mainly due to a combined $57.3 billion year-over-year increase in aggregate reserves for life and accident and health contracts at Prudential, Brighthouse, Jackson National, AXA Equitable and Transamerica, negated the rise in total income.
The growth in expenses led to the L/A industry reporting a net pretax operating loss of $50.1 billion, its first since 2008. A tax benefit of $8.5 billion and a $22.0 billion increase in net realized capital gains reduced the impact, resulting in the total industry net loss of $23.1 billion.
Despite the net loss, capital and surplus for the industry remained flat from the end of 2019 at $405.4 billion, aided by a $17.9 billion change in unrealized gains and a $6.9 billion increase in asset valuation reserve..
The a new Best’s Special Report, titled, “First Look – Three Month 2020 Life/Annuity Financial Results,” and the data is derived from companies’ three-month 2020 interim period statutory statements that were received by June 2, representing an estimated 91% of total industry premiums and annuity considerations.