US Life Insurance and Annuity Market Report: Rising rates present risk

Some of the same U.S. institutions that generated the highest rates of life, annuity and health premiums in 2021 may be poised to increase market rates again in 2022.

The list of the fastest growing insurance companies in the US in 2021, according to various methods established by S&P Global Market Intelligence, was led by groups and independent organizations that focus on the annuity business as a return to sell other types of annuities among themselves. market volatility, supplier disruptions and extremely low interest rates held the pandemic announcement in March 2020 for easy comparison. While premiums in the business line jumped by 14.8% in 2021, including first-year premiums, one-time premiums and renewals, the growth rate was only 9% higher than before the 2019 pandemic. Although 2022 got off to a slow start, an increase in federal spending from March to July has helped boost sales.

By making our expectations for the growth of the company at a common annual rate with a view of about 8.9% in 2022, we expect similar to what is good in the market of annuity products that offer consumers attractive interest rates and great security is about to bring the most solid. growth. Our growth outlook for the annuity business, as a whole, compares favorably with other lines.

Annuity writers win

Investors Heritage Life Insurance Co. ranked as the fastest-growing company in the sector in 2021 based on over 500% growth in direct payments and overall views, as well as first-year payments and one-time payments, a new standard. business development. Annuity-focused organizations, including Investors Heritage, took seven of the top 10 spots in the two categories.

Our rankings include US life groups and top organizations that meet the following criteria: 1) Direct payments and projections for 2020, total payments and considerations and first-year payments and one-time payments of at least $1 million, each; 2) Direct salary for 2021 with the growth of the proposal at least 25%; 3) 2021 directly the first year with premiums together growing at least 25%; and 4) growth in 2021 of at least 15% in total payments and proposals. These strategies are designed to ensure that the rankings include organizations that are recruiting new businesses and retaining a share of their production.

Frankfort, Ky.-based Investors Heritage cited the April 2021 launch of its fixed-income products and, to a lesser extent, investing in multi-year fixed income and high-growth assets. The rapid growth continued in the first quarter of 2022 as the company’s net income rose to $125.6 million from $37.9 million last year.

Comparisons will be more difficult for the company by 2022, but market trends seem to be contributing significantly to the growth of sales of various types of discounted and written annuities. In addition, Investors Heritage recently introduced a new fixed income product that provides a fixed rate of interest on indexed accounts during the investment period and ensures that policyholders do not lose account value when the market moves.

Investors Heritage’s first-year direct payments and one-time payments fell 76.4% in 2020 as the company reduced lending rates at the start of the pandemic due to economic uncertainty. Its volumes for 2021 were still 73.8% from 2019.

The outlook for a large increase in 2021 following a large decrease in 2020 in the first year and a single payment was not unique among the fastest growing insurers, although not as extreme as that shown by Investors Heritage. The third- and fourth-fastest-growing insurers that paid first-year premiums and single premiums showed double-digit declines in 2020 followed by double-digit growth in 2021.

American National Group Inc. it had an increase in deferred annuity payments and deposits received, and its entire 2021 in the group exceeded the amount of 2019 and 2020. Fixed annuity payments and deposits, meanwhile, approached the company’s 2019 volume.

Fixed annuity writer Opinion of the company Liberty Bankers Life Insurance Co., Ltd. It is said that its 2021 hike will include a reduction in credit costs and an increase in economic strength. Liberty Bankers Life Group also benefited from strong growth in its retail and health businesses.

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Powerful products in volatile times

Valid data for the second quarter is not yet available, but we can expect a large dispersion of funders’ fundraising results based largely on the types of assets they emphasize.

Research data released by LIMRA’s Secure Retirement Institute shows that annuity sales in the US rose by 9% in the first half of 2022 and by 14% in the second quarter as the exceptional growth of products left behind more than offset the significant weakness in the production of traditional investments. Annual sales are down 44% in the first half of 2022 and 76% in the second quarter. Fixed annuity sales rose by 20% and 19% in the period.

Public sector reports seem to agree with this.

Lincoln National Corp., the largest underwriter of diversified annuities, reported a 15.8% decline in total annuity sales for the second quarter. At the other end, Athene Holding Ltd. posted “record” quarterly revenue and a doubling of activity in its fixed income channel in the second quarter, according to parent Apollo Global Management Inc.’s financial report.

The top five sellers of deferred funds in the first quarter of 2022, according to the Secure Retirement Institute, were a group led by New York Life Insurance Co., the US division of American International Group Inc., the group that led the way. and Massachusetts Mutual Life Insurance Co., USAA Life Insurance Co. and Western & Southern Financial Group Inc. Global Atlantic Financial Group Ltd., ranked No. 6, benefited from KKR & Co. Inc. CFO Robert Lewin explained on Aug. 2 to call the conference a “low point” for annuity sales, with a total of $6 billion.

In the fixed annuity business, the five largest sellers in the first quarter of 2022 according to the Secure Retirement Index were US-based Athene Life, followed by Allianz Life Insurance Co. of North America, AIG, Sammons Enterprises Inc. ESOT life. companies and Fidelity & Guaranty Life Insurance Co. (Interestingly, F&G Life’s indexed annuity sales fell slightly year over year in the second quarter of 2022 to $1.11 billion from $1.14 billion, according to parent Fidelity National Financial Inc., but its MYGA production doubled to $1.09 billion .)

Athene grew in direct investment in small businesses and groups in 2021, but the latter was due to its pension contributions. Its US life companies ranked behind only Investors Heritage on our list of the fastest-growing businesses in 2021 based on direct cash flow and valuations, and ranked 7th for first-year direct growth and single payment.

Annual sales are expected to increase by 16% in 2021, according to the Secure Retirement Institute. In contrast to the trend in the second quarter of 2022, traditional exchange-traded funds and index-linked mutual funds outperformed both the capital markets and the diversified markets.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.