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2010 LIFE INSURERS
FACT BOOK
AMERICAN COUNCIL OF LIFE INSURERS
PROTECTION. SAVINGS. GUARANTEES.
AMERICAN COUNCIL OF LIFE INSURERS
LIFE INSURERS
FACt BOOk 2010
The American Council of Life Insurers is a Washington, D.C.-based trade association. Its member companies offer life insurance, long-term care insurance, disability income insurance, reinsurance, annuities, pensions, and other retirement and financial protection products.
© 2010 American Council of Life Insurers
No part of this publication may be reproduced, sorted in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without permission of the publisher.
Library of Congress Catalog Number 47–27134
ii
CONtENtS
Preface ix
Methodology xi
KeyStatistics xiii
1 Overview 1
Organizational Structure 1 Stock and Mutual Life Insurers 1 Other Life Insurance Providers 1 Employment 2 Foreign Ownership 2
2 Assets 7
Bond Holdings and Acquisitions 7 Types of Bonds 8 Characteristics of Bonds 8 Stock Holdings and Acquisitions 9 Mortgages 9 Real Estate 10 Policy Loans 10 Miscellaneous Assets 10 Foreign-Controlled Assets 10
3 Liabilities 23
Policy Reserves 23 Deposit-Type Contracts 24 Asset Fluctuation Reserves 24 Other Liabilities 24 Surplus Funds and Capital Stock 24 Capital Ratios 25
4 Income 35
Premium Income 35 Investment Income and Rate of Return 36 Net Gain From Operations 36
5 Expenditures 47
Contract Payments 47 From Life Insurance Policies 47 From Annuity Contracts 48 From Health Insurance Policies 48 Operating Expenses 48 Taxes 48 Investment Expenses 49
6 Reinsurance 57
Allocating Risk 57 Managing Risk 58 Underwriting Strength 58 Product Flexibility 58 Financial Positioning 58 Types of Reinsurance 59 Proportional Reinsurance 59 Non-Proportional Reinsurance 59
7 LifeInsurance 63
Individual Life Insurance 63 Types of Policies 64 Characteristics of Individual Policies 64 Group Life Insurance 65 Credit Life Insurance 65 Policy Claims Resisted or Compromised 66
8 Annuities 75
Group and Individual Annuities 75 Supplementary Contracts, Annuities Certain, and Other Annuities 76
9 DisabilityIncome andLong-TermCareInsurance 81
Disability Income Insurance 81 Individual Disability Income Insurance 81 Group Disability Income Insurance 82 Long-Term Care Insurance 83 Individual Long-Term Care Insurance 83 Group Long-Term Care Coverage 84 Accelerated Benefits 84
10 IntheStates 85
11 IndustryRankings 97
12 MortalityandLifeExpectancy 123
APPENDIX 135
A GlossaryofInsuranceRelatedTerms 137B HistoricDates 153
C LifeInsuranceRelatedOrganizations 163
D StateInsuranceOfficials 171
iii
5
ILLUStRAtIONS
Tables
Overview
1.1 U.S. Life Insurers Organizational Structure, by Number of Companies 2
1.2 Size of U.S. Life Insurers by Organizational Structure, 2009 (millions) 3
1.3 Veterans Life Insurance, 2009 3
1.4 Insurance Industry Employment in the United States 3
1.5 Foreign-Owned U.S. Life Insurers, 2005–2009 4
1.6 Foreign-Owned Life Insurers Operating in the United States, by Country of Origin 4
1.7 U.S. Life Insurers Organizational Structure, by Number of Companies and Year 5
1.8 Insurance Industry Employment in the United States, by Year 6
Assets
2.1 Distribution of Life Insurer Assets, by Account Type, 2009 (millions) 11
2.2 Distribution of Life Insurer Assets, by Account Type and Year 12
2.3 Distribution of Long-Term General Account Bond Investments 14
2.4 Distribution of General Account Bonds, by Remaining Maturity, 2005–2009 15
2.5 Distribution of General Account Bonds at Time of Purchase, 2009 15
2.6 Distribution of General Account Bonds, by NAIC Quality Class 16
2.7 Quality of Mortgages Held by Life Insurers (millions) 18
2.8 General Account Mortgages for Life Insurers, by Type and Loan-to-Value
Ratios, 2009 (millions) 19
2.9 Real Estate Owned by Life Insurers, by Type 19
2.10 Foreign-Controlled Assets of U.S. Life Insurers, by Country and Year (millions) 20
2.11 Asset Distribution of Life Insurers, by Year (millions) 21
Liabilities
3.1 Liabilities and Surplus Funds of Life Insurers 25
3.2 Policy Reserves of Life Insurers, by Line of Business 27
3.3 Deposit-Type Contracts, 2009 (millions) 29
3.4 Capital Ratios of Life Insurers (percent) 29
3.5 Levels of Risk-Based Capital Held by Life Insurers, 1999–2009 30
3.6 Life Insurers Policy Reserves, by Line of Business and Year (millions) 31
3.7 Life Insurance Policy Reserves, by Type and Year (millions) 32
3.8 Life Insurer Liabilities and Surplus Funds, by Year (millions) 33
3.9 Capital Ratios of Life Insurers, by Year (percent) 34
v
6 Illustrations
Income
4.1 Income of Life Insurers 37
4.2 Premium Receipts of Life Insurers 37
4.3 Individual and Group Life Insurance Net Premium Receipts, 2009 (millions) 38
4.4 Individual and Group Annuity Considerations, 2009 (millions) 39
4.5 Individual Life Premiums and Annuity Considerations as Percentage
of Disposable Personal Income 39
4.6 Accident and Health Insurance Net Premium Receipts 39
4.7 Net Investment Income 40
4.8 Rates of Return on Invested Assets of Life Insurers 40
4.9 Net Gain From Operations After Federal Income Taxes 41
4.10 Income of Life Insurers, by Year (millions) 42
4.11 Individual Life Insurance Premium Receipts, by Year (millions) 43
4.12 Individual Annuity Considerations, by Year (millions) 44
4.13 Rates of Return on Invested Assets of Life Insurers, by Year (percent) 45
Expenditures
5.1 Expenditures of Life Insurers 49
5.2 Payments From Life Insurance Policies 50
5.3 Payments From Annuity Contracts 51
5.4 Payments From Health Insurance Policies 51
5.5 Life Insurer Home- and Field-Office Expenses 52
5.6 Taxes, Licenses, and Fees 52
5.7 Investment Expenses of Life Insurers 53
5.8 Payments Under Life Insurance Policies and Annuity Contracts,
by Year (millions) 54
5.9 Payments to Life Insurance Beneficiaries, by Year 55
5.10 Health Insurance Benefit Payments by Life Insurers, by Year (millions) 56
Reinsurance
6.1 Reinsurance Assumed and Ceded—Premiums 60
6.2 Life Reinsurance Assumed (face amount) 61
Life Insurance
7.1 Life Insurance in the United States 66
7.2 Individual Life Insurance Purchases in the United States, by Plan Type, 2009 68
7.3 Life Insurance Purchases, by Participating Status 68
7.4 Voluntary Termination Rates for Life Insurance Policies, Calculated by Face Amount (percent) 69
7.5 Voluntary Termination Rates for Life Insurance Policies, Calculated by Number
of Policies (percent) 69
7.6 Life Insurance With Disability Provisions, 2009 70
7.7 New Policy Claims Resisted or Compromised (thousands) 71
7.8 Life Insurance Purchases, by Year 72
7.9 Life Insurance in Force in the United States, by Year (millions) 73
vi
7Illustrations
Annuities
8.1 Annuity Considerations 76
8.2 Reserves for Annuity Contracts 77
8.3 Annuity Benefit Payments 77
8.4 Annuity Considerations, by Year (millions) 78
8.5 Annuity Reserves, by Year 79
In the States
10.1 Life Insurers, by State of Domicile, 2009 86
10.2 Life Insurance Purchases, by State, 2009 (millions) 87
10.3 Life Insurance in Force, by State, 2009 88
10.4 Life Insurance and Annuity Benefit Payments, by State, 2009 (thousands) 90
10.5 Payments to Life Insurance Beneficiaries, by State, 2009 (thousands) 92
10.6 Direct Premium Receipts of Life Insurers, by State, 2009 (millions) 94
10.7 Mortgages Owned by Life Insurers, by Type and State, 2009 (thousands) 95
10.8 Real Estate Owned by Life Insurers, by State, 2009 (thousands) 96
Industry Rankings
11.1 Largest Life Insurers, by Total Assets, 2009 (thousands) 98
11.2 Largest Life Insurers, by General Account Assets, 2009 (thousands) 99
11.3 Largest Life Insurers, by Separate Account Assets, 2009 (thousands) 100
11.4 Largest Life Insurers, by Individual Net Life Insurance Premiums, 2009 (thousands) 101
11.5 Largest Life Insurers, by Group Net Life Insurance Premiums, 2009 (thousands) 102
11.6 Largest Life Insurers, by Total Net Life Insurance Premiums, 2009 (thousands) 103
11.7 Largest Life Insurers, by Individual Direct Life Insurance Premiums,
2008 (thousands) 104
11.8 Largest Life Insurers, by Group Direct Life Insurance Premiums, 2009 (thousands) 105
11.9 Largest Life Insurers, by Total Direct Life Insurance Premiums, 2009 (thousands) 106
11.10 Largest Life Insurers, by Individual Life Insurance Issued, 2009 (thousands) 107
11.11 Largest Life Insurers, by Group Life Insurance Issued, 2009 (thousands) 108
11.12 Largest Life Insurers, by Total Life Insurance Issued, 2009 (thousands) 109
11.13 Largest Life Insurers, by Individual Life Insurance in Force, 2009 (thousands) 110
11.14 Largest Life Insurers, by Group Life Insurance in Force, 2009 (thousands) 111
11.15 Largest Life Insurers, by Total Life Insurance in Force, 2009 (thousands) 112
11.16 Largest Life Insurers, by Individual Net Annuity Considerations, 2009 (thousands) 113
11.17 Largest Life Insurers, by Group Net Annuity Considerations, 2009 (thousands) 114
11.18 Largest Life Insurers, by Total Net Annuity Considerations, 2009 (thousands) 115
11.19 Largest Life Insurers, by Individual Direct Annuity Considerations, 2009
(thousands) 116
11.20 Largest Life Insurers, by Group Direct Annuity Considerations, 2009 (thousands) 117
11.21 Largest Life Insurers, by Total Direct Annuity Considerations, 2009 (thousands) 118
11.22 Largest Life Insurers, by Individual Annuity Reserves, 2009 (millions) 119
11.23 Largest Life Insurers, by Group Annuity Reserves, 2009 (millions) 120
11.24 Largest Life Insurers, by Total Annuity Reserves, 2009 (millions) 121
vii
8 Illustrations
Mortality and Life Expectancy
12.1 Death Rates in the United States 124
12.2 Life Expectancy, by Age and Gender, 1900–2007 125
12.3 Mortality Tables 131
FIgures
2.1 Growth of Life Insurers’ Assets 12
2.2 Asset Distribution of Life Insurers, 2009 14
2.3 Mortgages Held by Life Insurers, by Type 17
2.4 Real Estate Owned by Life Insurers, 2009 17
3.1 Growth of Life Insurers’ Policy Reserves 26
3.2 Distribution of Life Insurers’ Policy Reserves, 2009 28
4.1 Distribution of Life Insurers’ Net Premium Receipts, 2009 38
5.1 Distribution of Life Insurers’ Expenditures, 2009 50
7.1 Individual, Group, and Credit Life Insurance in Force in the United States
(face amount) 67
7.2 Average Face Amount of Individual Life Insurance Policies Purchased 67
viii
9
PREFACE
The life insurers Fact Book, the annual statistical
report of the American Council of Life Insurers (ACLI),
provides information on trends and statistics about the
life insurance industry. ACLI represents more than 300
legal reserve life insurer and fraternal benefit society
member companies operating in the United States. These
member companies represent over 90% of the assets and
premiums of the U.S life insurance and annuity industry.
ACLI advocates the interests of life insurers and their
millions of policyholders before federal and state
legislators, state insurance departments, administration
officials, federal regulatory agencies, and the courts. ACLI
expands awareness of how the products offered by life
insurers—life insurance, pensions, annuities, disability
income insurance, and long-term care insurance—help
Americans plan for and achieve financial and retirement
security.
Unless otherwise noted, the data reported in the Life
Insurers Fact Book are ACLI tabulations of the National
Association of Insurance Commissioners (NAIC) 2009
statutory data for the life industry as of June 2010, and
represent U.S. legal reserve life insurance companies
and fraternal benefit societies. NAIC data are used by
permission. The NAIC does not endorse any analysis or
conclusions based on use of its data.
We would like to acknowledge ACLI staff who prepared
the Life Insurers Fact Book 2010: Michele Alexander,
Khari Cook, Jim Bishop, Bill Hart, Alex Olson, Laura
Polutanovich, Ken Shields, Anna Varnavas, and Jiangmei
Wang.
David Wentworth Andrew Melnyk, Ph.D.
Vice President, Research Managing Director, Research
ix
MEtHODOLOGY
The assets of a fleet typically differ slightly from the sum
of the assets of individual companies in the fleet, because
the net value (stockholder equity) of the subsidiary is
counted at both the subsidiary and the parent level. This
same double-counting discrepancy exists for liabilities,
investment income, and surplus. Adjustments have been
made, when possible, to eliminate the double-counting
of assets, liabilities, investment income, and surplus.
Chapter 4 presents calculations of gross and net rates
of return on investment based on formulas traditionally
used in the industry. The net rate of return is calculated
as:
(net investment income)/ 2-year average net invested
assets. The formula for average net invested assets
is (current year net invested assets + current year
investment income due – current year borrowed money
– current year payable for securities – current year capital
notes – current year surplus notes + previous year net
invested assets + previous year investment income due –
previous year borrowed money – previous year payable
for securities – previous year capital notes – previous
year surplus notes – net investment income) / 2.
The gross rate of return on fixed-rate assets is calculated
as:
(Gross investment income on bonds)/ average net
investment in bonds. The denominator is (CY bonds
+ PY Bonds – gross investment income on bonds) /2.
Unless otherwise noted, data in the Life Insurers Fact
Book come from the annual statements of life insurers
filed with the National Association of Insurance
Commissioners (NAIC). These data represent the U.S.
insurance business of companies (or branches of foreign
companies) regulated by state insurance commissioners.
Unless otherwise noted, data for years after 2002 include
information for both life insurance companies and for
fraternal benefit societies that sell life insurance products.
Prior to 2003, data do not include fraternal benefit
insurance sales. Where fraternal data are included, they
are included as individual, rather than group, business.
Data on life insurance sales by savings banks and the U.S.
Department of Veterans Affairs are provided separately
in Chapter 1 only.
Most of the Fact Book data are reported in standardized
tables that summarize information for the current year
(2009 data), last year (2008 data), and 10 years previous
(1999 data), along with the average annual percentage
change over the last year and the last ten years. In
cases where 1999 data are not available, then the oldest
available data are reported.
Company ownership is reflected on a fleet basis. That is,
if a stock company is owned by a mutual parent, both
are now classified as mutual companies. The same is
true for insurance companies owned by non-U.S. parents.
This affects most notably tables in Chapter 1.
xi
xiii
key U.S. Life Insurers Statistics
Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsuranceinforce(millions)1
Individual $9,172,397 $10,254,379 $10,324,455 1.2 0.7 Credit 213,453 148,443 125,512 -5.2 -15.4 group 6,110,218 8,717,453 7,688,328 2.3 -11.8Total 15,496,069 19,120,276 18,138,295 1.6 -5.1
Annuityconsiderations(millions)2 Individual3 $115,621 $208,965 $128,853 1.1 -38.3 group 154,591 119,169 102,727 -4.0 -13.8Total 270,212 328,135 231,580 -1.5 -29.4
Paymentsunderlifeinsuranceandannuitycontracts(millions) Paymentstobeneficiaries $41,363 $59,949 $59,470 3.7 -0.8 surrendervalues4 231,144 295,283 230,846 0.0 -21.8 Policyholderdividends 19,149 19,053 16,163 -1.7 -15.2 annuitypayments5 62,485 69,648 67,068 0.7 -3.7 Maturedendowments 528 614 573 0.8 -6.7 Otherpayments6 620 555 768 2.2 38.4Total 355,288 445,101 374,888 0.5 -15.8
Incomeoflifeinsurers(millions) lifeinsurancepremiums $120,274 $147,182 $124,564 0.4 -15.4 annuityconsiderations2 270,212 328,135 231,580 -1.5 -29.4 Healthinsurancepremiums 100,049 165,034 166,164 5.2 0.7Total 490,535 640,350 522,308 0.6 -18.4
Investmentincome 186,563 260,123 211,650 1.3 -18.6 Otherincome7 49,830 40,166 47,468 -0.5 18.2 aggregatetotal 726,928 940,638 781,426 0.7 -16.9
LifeinsurersdoingbusinessintheUnitedStates(units) stock 1,064 736 709 -4.0 -3.7 Mutual8 250 137 136 -5.9 -0.7 Fraternal9 Na 95 93 Na -2.1 Other10 33 8 8 -13.2 0.0Total 1,347 976 946 -3.5 -3.1
Source: aClItabulationsofNationalassociationofInsuranceCommissioners(NaIC)data,usedbypermission.Notes: NaICdoesnotendorseanyanalysisorconclusionsbasedonuseofitsdata.Codificationeffectivewith2001annualstatementfilingschangedthereportingofcertainlinesofbusiness,particularlydeposit-typecontracts,asexplainedinnumberedfootnotes.Na:Notavailable.1Datarepresentdirectbusiness.2beginningin2001,excludesdepositsforguaranteedinterestcontractsduetocodification.3For2008and2009,includessupplementarycontractswithlifecontingencies.4beginningin2001,excludespaymentsunderdeposit-typecontracts,andincludesannuitywithdrawalsoffunds,forwhichacomparableamountinprioryearsisnotavailable.5For2008and2009,excludespaymentsunderdeposit-typecontracts.6Includessomedisabilitybenefitsandretainedassets.7Includescommissionsandexpenseallowanceonreinsuranceceded.For2008and2009,includesamortizationofinterestmaintenancereserve.8Includesstockcompaniesownedbymutualholdingcompanies.9Includesstockcompaniesownedbyfraternalbenefitsocieties.10Includesfarmbureau,reciprocal,andriskretentiongroups.
FACt BOOk 2010
1U.S. life insurance companies sell the vast majority of life
insurance and annuities purchased in the United States.
Fraternal organizations and federal government agencies
are also in the marketplace, and certain Canadian life
insurers with U.S. legal reserves are allowed to sell
insurance directly from their Canadian offices to U.S.
purchasers. Data from Canadian companies are not
included in this chapter.
At the end of 2009, 946 life insurance companies were
in business in the United States (Table 1.1). The number
of active companies peaked in 1988 (Table 1.7), and has
since fallen steadily, mostly due to company mergers
and consolidations. This streamlining has helped to
reduce operating costs and general overhead, and has
significantly increased efficiency.
OrganizatiOnal Structure
Stock and Mutual Life Insurers
Most life insurers are organized as either stock or
mutual companies. Stock life insurance companies issue
stock and are owned by their stockholders. Mutual
companies are legally owned by their policyholders and
consequently do not issue stock.
Stock life insurers can be owned by other stock life
insurance companies, mutual life insurance companies,
or companies outside the life insurance industry. Only
policyholders own a mutual company, however. If a
stock company is owned by a mutual company, that
stock company is categorized as a mutual company. The
majority of life insurers are stock companies—709, or 75
percent of the industry (Table 1.1). Many life insurers
are affiliated with other life and non-life insurance
companies in fleets with a single owner.
Besides consolidation, another recent trend in the life
insurance industry is demutualization and the formation
of mutual holding companies—a structure that allows
easier and less expensive access to capital. In creating a
mutual holding company, the mutual insurer either starts
a stock insurance company or acquires a stock company.
For data in this chapter, mutual holding companies are
included in the totals for pure mutual companies.
Together, stock and mutual life insurers provide most
of the insurance and annuities underwritten by U.S.
organizations (Table 1.2). Mutual companies had $4.7
trillion of life insurance in force in 2009 and stock life
insurers, $13 trillion. Fraternal societies and other type
companies underwrite the remainder of U.S. insurance.
Other Life Insurance Providers
Fraternal benefit societies provide both social and
insurance benefits to their members. These organizations
are legally required to operate through a lodge system,
allowing only lodge members and their families to own
the fraternal society’s insurance. In 2009, there were 93
fraternal life insurance companies that had $310 billion of
life insurance in force and $107 billion in assets (Tables
1.1 and 1.2).
The Department of Veterans Affairs provides protection
to U.S. veterans under six insurance programs: U.S.
Government Life Insurance, National Service Life
Insurance, Veterans’ Special Life Insurance, Service-
Disabled Veterans Insurance, Veterans’ Reopened
OVerVieW
2 American Council of Life Insurers
Insurance, and Veterans’ Mortgage Life Insurance.
The federal agency also oversees three life insurance
programs for members of the uniformed services:
Servicemembers’ Group Life Insurance, SGLI Family
Coverage, and Veterans’ Group Life Insurance.
Veterans’ life insurance in force totaled $1.3 trillion
in 2009 (Table 1.3). U.S. Government Life Insurance,
covering World War I veterans, had $13 million of
insurance in force in 2009, while National Service Life
Insurance, for veterans of World War II and those covered
by the Insurance Act of 1951, totaled $10 billion. Service-
Disabled Veterans Insurance—for veterans separated
from service after April 1951 who have a service-
connected disability but are otherwise insurable—had
$2 billion of insurance in force in 2009.
The largest life insurance plan, Servicemembers’ Group
Life Insurance, had $901 billion of insurance in force
with 2.4 million policies at year-end 2009 (Table 1.3).
Table 1.1 u.S. life insurers Organizational Structure, by number of companies
In business at year’s end Average annual percent change
2008 2009 2008/2009
Stock 736 709 -3.7
Mutual1 137 136 -0.7
Fraternal2 95 93 -2.1
Other3 8 8 0.0
Total 976 946 -3.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Note: NAIC does not endorse any analysis or conclusions based on use of its data.1Includes stock companies owned by mutual parents (life & PC) and mutual holding companies.2Includes stock companies owned by fraternal benefit societies.3Includes farm bureau, reciprocal, and risk retention groups.
emplOyment
The insurance industry plays an important role in the
nation’s economy. In 2009, U.S. insurers employed 2.2
million individuals in all of their branches, remaining
stable from a year earlier (Table 1.4).
Government data on employees of insurance agencies
and home offices in 2009 show 1.4 million insurance
home-office personnel (352,300 in life insurance) and
880,500 insurance agents, brokers, and service personnel.
FOreign OWnerShip
The proportion of life insurance companies operating in
the United States that are foreign-owned was 11 percent
in 2009 (Table 1.5).
Practically, the same countries have fielded the major
foreign players in the U.S. market since the mid-1990s.
Among life insurance companies operating in the United
States during 2009, Canada controlled 23 companies; the
Netherlands, 13; Switzerland, 13; Germany, 12; France,
11; the United Kingdom, 11 (Table 1.6).
3Overview
Table 1.2Size of u.S. life insurers, by Organizational Structure, 2009 (millions)
Stock Mutual1 Fraternal Other2 Total
Life insurance in force $12,977,309 $4,706,695 $310,079 $144,212 $18,138,295
Life insurance purchased 2,131,751 782,821 31,209 23,249 2,969,030
Assets 3,713,621 1,110,484 106,801 27,787 4,958,693
Benefit payments3 392,345 104,760 7,314 2,700 507,119
Premium income4 380,956 130,118 8,871 2,362 522,308
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Note: NAIC does not endorse any analysis or conclusions based on use of its data.1Includes stock companies owned by mutual holding companies.2Includes farm bureau, reciprocal, and risk retention groups.3Includes payments to beneficiaries, surrender values, policy dividends, annuity payments, matured endowments, and other payments.4Includes life insurance premiums, annuity considerations, and accident and health premiums.
Table 1.3Veterans life insurance, 2009
Policies Face amount in force (millions)
Veterans programs U.S. Government Life Insurance 4,456 $13 National Service Life Insurance 812,931 9,574 Veterans’ Special Life Insurance 173,734 2,269 Service-Disabled Veterans Insurance 204,445 2,080 Veterans’ Reopened Insurance 34,302 341 Veterans’ Mortgage Life Insurance 2,293 169
Total 1,232,161 14,446Uniformed service member programs Servicemembers’ Group Life Insurance (SGLI) 2,395,500 901,317 Traumatic Injury Protection (TSGLI)* - 230,850 SGLI Family Coverage 3,155,000 128,839
Veterans’ Group Life Insurance 429,502 58,374
Total 5,980,002 1,319,380Aggregate total 7,212,163 1,333,826
Source: U.S. Department of Veterans Affairs.*TSGLI is a rider to the basic SGLI coverage.
Table 1.4insurance industry employment in the united States
Number employed Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Home-office personnel Life insurance 496,100 356,300 352,300 -3.4 -1.1 Health insurance 319,200 441,300 437,500 3.2 -0.9 Other 637,400 599,100 576,400 -1.0 -3.8
Total 1,452,700 1,396,700 1,366,200 -0.6 -2.2
Agents, brokers, and service personnel 783,400 908,500 880,500 1.2 -3.1
Aggregate total 2,236,100 2,305,200 2,246,700 0.0 -2.5
Source: U.S. Department of Labor, Bureau of Labor Statistics. Current Employment Statistics survey (National).Note: The Bureau of Labor Statistics adjusts annual employment data in April of the year following its survey.
4 American Council of Life Insurers
Table 1.5Foreign-Owned u.S. life insurers, 2005–2009
Number of companies Average annual percent change
2005 2006 2007 2008 2009 2005/2009 2008/2009
U.S. life insurers 1,119 1,072 1,009 976 946 -4.1 -3.1
Foreign-owned U.S. life insurers 106 102 101 105 103 -0.7 -1.9
Percentage of U.S. life insurers 9.5% 9.5% 10.0% 10.8% 10.9%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Companies are defined as foreign owned if more than 50 percent of stock is owned by a foreign entity or entities.
Table 1.6Foreign-Owned life insurers Operating in the united States, by country of Origin
Number of companies
2005 2006 2007 2008 2009
Barbados - 2 2 2 2
Bermuda 2 3 3 4 5
Canada 24 24 26 26 23
Cayman Islands 5 5 6 5 5
France 11 13 13 11 11
Germany 6 4 5 12 12
Italy 1 1 1 1 1
Japan 3 2 3 3 3
Netherlands 17 15 15 13 13
South Africa 1 1 1 1 1
Spain 2 2 2 2 2
Sweden 1 1 1 1 1
Switzerland 16 12 11 13 13
United Kingdom 17 17 12 11 11
Total 106 102 101 105 103
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Companies are defined as foreign owned if more than 50 percent of stock is owned by a foreign entity or entities.
5Overview
Table 1.7u.S. life insurers Organizational Structure, by number of companies and year
In business at year’s end
Year Stock Mutual Fraternals Other1 Total
1950 507 142 NA NA 6491955 942 165 NA NA 1,1071960 1,286 155 NA NA 1,4411965 1,475 154 NA NA 1,6291970 1,627 153 NA NA 1,7801975 1,603 143 NA NA 1,7461980 1,823 135 NA NA 1,9581981 1,855 136 NA NA 1,9911982 1,926 134 NA NA 2,0601983 1,985 132 NA NA 2,1171984 2,062 131 NA NA 2,1931985 2,133 128 NA NA 2,2611986 2,128 126 NA NA 2,2541987 2,212 125 NA NA 2,3371988 2,225 118 NA NA 2,3431989 2,153 117 NA NA 2,2701990 2,078 117 NA NA 2,1951991 1,947 117 NA NA 2,0641992 1,835 109 NA NA 1,9441993 1,736 108 NA NA 1,8441994 1,565 115 NA 10 1,6901995* 1,356 259 NA 35 1,6501996* 1,331 240 NA 36 1,6071997* 1,193 238 NA 45 1,4761998* 1,167 248 NA 29 1,4441999* 1,064 250 NA 33 1,3472000* 1,016 223 NA 30 1,2692001* 981 227 117 16 1,3412002* 957 203 114 10 1,2842003* 928 183 105 11 1,2272004* 898 164 108 9 1,1792005* 854 154 102 9 1,1192006* 815 145 103 9 1,0722007* 763 138 99 9 1,0092008* 736 137 95 8 9762009* 709 136 93 8 946
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. After 1993, data include life insurance companies that sell accident and health insurance.NA: Not available.*Beginning with 1995 data, stock companies that are part of fleets headed by non-stock companies are counted by the parent’s ownership type, not as stock companies.1Includes hospital, medical, dental, and indemnity companies.
6 American Council of Life Insurers
Table 1.8insurance industry employment in the united States, by year
Home-office personnel
Agents, brokers, Life Health and service Aggregate Year insurance insurance Other Total personnel total
1960 452,400 50,200 329,100 831,700 217,300 1,049,000 1965 481,200 54,200 358,000 893,400 250,300 1,143,700 1970 525,600 93,900 410,200 1,029,700 288,000 1,317,700 1975 520,500 122,100 442,700 1,085,300 356,600 1,441,900 1980 531,900 141,900 550,300 1,224,100 463,800 1,687,900 1981 542,200 142,700 552,000 1,236,900 475,800 1,712,700 1982 546,100 142,100 549,100 1,237,300 485,900 1,723,200 1983 539,900 144,800 544,200 1,228,900 498,900 1,727,800 1984 536,700 153,900 549,100 1,239,700 525,000 1,764,700 1985 559,300 170,700 561,600 1,291,600 548,200 1,839,800 1986 578,200 188,100 598,500 1,364,800 579,400 1,944,200 1987 578,000 202,100 634,900 1,415,000 611,800 2,026,800 1988 570,400 216,500 648,500 1,435,400 639,600 2,075,000 1989 550,200 228,100 660,100 1,438,400 651,800 2,090,200 1990 547,500 241,600 673,100 1,462,200 663,300 2,125,500 1991 560,000 258,700 675,900 1,494,600 666,300 2,160,900 1992 550,300 270,100 675,200 1,495,600 656,600 2,152,200 1993 552,500 237,900 608,100 1,398,500 684,000 2,082,500 1994 562,600 249,400 606,500 1,418,500 700,300 2,118,800 1995 547,200 260,100 588,300 1,395,600 712,600 2,108,200 1996 510,000 278,000 593,600 1,381,600 726,400 2,108,000 1997 505,300 292,100 602,000 1,399,400 744,100 2,143,500 1998 510,600 306,200 626,300 1,443,100 766,300 2,209,400 1999 496,100 319,200 637,400 1,452,700 783,400 2,236,100 2000 481,100 327,700 623,900 1,432,700 787,800 2,220,500 2001 470,300 337,500 622,700 1,430,500 803,200 2,233,700 2002 446,000 345,100 621,700 1,412,800 820,400 2,233,200 2003 440,500 348,500 639,600 1,428,600 837,400 2,266,000 2004 392,400 372,000 634,200 1,398,600 860,100 2,258,700 2005 334,500 427,400 623,800 1,385,700 873,600 2,259,300 2006 362,400 425,000 625,400 1,412,800 890,800 2,303,600 2007 352,800 431,200 613,000 1,397,000 909,800 2,306,800 2008 356,300 441,300 599,100 1,396,700 908,500 2,305,2002009 352,300 437,500 576,400 1,366,200 880,500 2,246,700
Source: U.S. Department of Labor, Bureau of Labor Statistics, Current Employment Statistics survey (National).Note: Figures comprise only those on the payroll of insurers that participate in the unemployment insurance program.
2Assets held by life insurers back the companies’
life, annuity, and health liabilities. Accumulating
these assets—via the collection of premiums from
policyholders and earnings on investments—provides
the U.S. economy with an important source of investment
capital. Life insurers held $5.0 trillion in assets in 2009
(Table 2.1). Assets of U.S. life insurers rose 7 percent
during 2009 (Table 2.2).
Financial instruments comprise most life insurance
company assets and can generally be classified into:
n Bonds, both corporate and government
n Stocks
n Mortgage and real estate holdings
n Policy loans
A life insurer divides its assets between two accounts that
differ largely in the nature of the liabilities or obligations
for which the assets are being held and invested. The
general account supports contractual obligations for
guaranteed, fixed-dollar benefit payments, such as
life insurance policies. The separate account supports
liabilities associated with investment risk pass-through
products or lines of business, such as variable annuities,
variable life insurance, and pension products.
State laws allow assets in separate accounts to be
invested without regard to the restrictions usually
placed on the general account. A separate account
portfolio might comprise only common stocks or bonds
or mortgages, or some combination of these and other
investments. Separate account assets totaled $1.6 trillion
at the end of 2009—up 19 percent from the previous year
(Table 2.2). General account assets amounted to $3.3
trillion in 2009, up 2 percent from 2008.
Bond Holdings and acquisitions
Bonds are publicly traded debt securities. Often referred
to as fixed-income securities, bonds generally offer low
risk and a greater certainty of rates of return. Not only
does the borrower (seller of the bond) agree to pay a
fixed amount of interest periodically and repay a fixed
amount of principal at maturity, but the obligation to
make payments on the bond takes precedence over
other claims of lenders and stockholders.
At year-end 2009, 52 percent of life insurer assets were
held in bonds. Total bond holdings of both general and
separate accounts amounted to $2.6 trillion, up $152
billion from 2008 (Tables 2.1–2.2). Holdings of bonds in
separate accounts increased 3 percent in 2009 to $220
billion. Bond holdings in general accounts increased to
$2.4 trillion (Table 2.2).
Bonds are issued by a variety of borrowing organizations,
including domestic and foreign corporations, the U.S.
Treasury, various U.S. government agencies, and state,
local, and foreign governments. Long-term U.S. Treasury
securities in the general account totaled $101 billion,
U.S. government obligations $64 billion, and foreign
government bonds $56 billion (Table 2.3). The largest
portion of long-term bonds was in unaffiliated securities,
with both U.S. and foreign investments totaling $1.5
trillion, or nearly two-thirds of all long-term general
account bonds (63%). Long-term bonds issued by U.S.
assEts
8 American Council of Life Insurers
states, territories, and political subdivisions came to
$24 billion, while bonds issued for revenue, assessment,
and industrial development totaled $47 billion.
Types of Bonds
Corporate Bonds
Life insurers are significant investors in the corporate
bond market, having been the largest institutional holder
of corporate bonds issued in U.S. markets since the
1930s. Private or direct placements—where the financial
institution negotiates directly with the corporation over
the terms of the offering—account for a sizable share
of life insurer investments in corporate bonds. Life
insurance companies are the major lenders in the direct
placement market.
Corporate debt issues in 2009 represented the largest
component of life insurer assets at 32 percent (Table 2.1).
Corporate debt issues totaled $1.6 trillion by year’s end
(Table 2.2). These investments have generally increased
steadily for many years and have grown at a 3 percent
annual rate in the last decade.
Government Bonds
Bonds of the U.S. government include U.S. Treasury
securities and others issued by federal agencies or
sponsored by the federal government, such as the
Federal National Mortgage Association and the Federal
Home Loan Banks. Government securities rose to
$331 billion at the end of 2009, up $70 billion from
the previous year (Tables 2.1–2.2). These holdings, in
addition to U.S. Treasury and federal agency holdings,
include guaranteed, special revenue, and other issues
of the 50 states, District of Columbia, Puerto Rico,
and U.S. territories and possessions and their political
subdivisions.
The vast majority of long-term securities were invested
in U.S. government securities ($271 billion) as opposed
to those of foreign governments and international
agencies ($60 billion), such as the International Bank for
Reconstruction and Development.
Characteristics of Bonds
Maturity
Bonds have limited lives and expire on a given date,
called the issue’s maturity date. Twenty-nine percent
of general account bonds held at year-end 2009 had a
maturity between five and 10 years. Another 29 percent
matured between one and five years, 19 percent had a
maturity over 20 years, 13 percent matured between 10
and 20 years, and 10 percent had a maturity of one year
or less (Table 2.4).
At the time of purchase, 34 percent of bonds had a
maturity date of 20 years or more (Table 2.5), while 28
percent had a maturity date of 10 to 20 years. Bonds
with maturity dates of five to 10 years (30%), and less
than five years (9%) were the remainder.
Quality
In purchasing a bond, investors examine its quality. The
higher the quality of the bond, the lower the risk, and
the higher the degree of assurance that investors will get
their money back at maturity. Consequently, high-quality
bonds are ideal for long-term capital accumulation.
Bond holdings can be categorized among six quality
classes established by the National Association of
Insurance Commissioners. At year-end 2009, 93 percent
of total general account bonds were investment grade,
Classes 1 and 2 (Table 2.6). The percentage of total bonds
in or near default (Class 6) was 0.2 percent.
Of the $2.5 trillion in general account bonds held by
insurance companies in 2009, $1.9 trillion was invested
in publicly traded bonds and $617 billion in privately
traded bonds (Table 2.6). Ninety-four percent of the
publicly traded bonds were investment grade (Classes 1
and 2) compared with 87 percent of the privately traded
bonds. Of the publicly traded bonds, 0.2 percent were
in or near default (Class 6), compared with 0.5 percent
of the privately traded bonds.
9Assets
stock Holdings and acquisitions
Life insurers’ changing portfolios reflect long-term shifts
in investment demand. Since the early 1990s, the share
of assets held in stocks has been increasing. The average
annual growth in equity holdings was 3 percent between
1999 and 2009 (Table 2.2).
Historically, stocks had been a small percentage of
total assets for reasons rooted in both the investment
philosophy of the industry and the laws regulating life
insurance. Stocks had not been heavily used as a major
investment medium for funds backing life insurance
policies because of the policies’ contractual guarantees
for specified dollar amounts.
Part of the investment shift is due to changes in the
relative yields of various investment types. Other factors
are the introduction of variable life insurance and the
growth in funding pension plans with equity securities of
life insurers and variable annuities. State laws generally
permit certain assets of these and other plans to be
maintained in an account separate from a company’s
other assets, with up to 100 percent invested in stocks
or other equities.
Life insurer holdings of corporate stock rose 22 percent
between 2008 and 2009 to $1.4 trillion, accounting
for more than a quarter of total assets (28%). At year-
end 2009, $1.3 trillion, or 94 percent, of stock held
by life insurance companies was in separate accounts
(Table 2.2).
Common stock accounted for $1.37 trillion, or 99
percent, of all stock held by life insurers in 2009 (Table
2.1). Holdings of common stock increased 29 percent in
2009 while there was a large decrease in preferred-stock
holdings (Tables 2.1–2.2).
MortgagEs
Mortgages generally are considered riskier fixed-income
investments than bonds. Over the past decade, life
insurers have slightly reduced the relative size of their
mortgage portfolios in favor of other investments. In
2009, mortgages decreased by 5 percent, falling to $336
billion and accounting for 7 percent of combined account
assets (Tables 2.1–2.2).
Loans on commercial properties, such as office
buildings, shopping centers, manufacturing plants, and
warehouses, were $314 billion at the end of 2009 (Table
2.7). Mortgages for residential properties were $4 billion,
or 1 percent of total mortgages held by life insurers on
U.S. properties. Farm mortgages decreased to $18 billion,
accounting for 5 percent of total mortgages in 2009.
Properties underlying life insurer holdings of non-
farm, nonresidential mortgages cover a broad range of
commercial, industrial, and institutional uses. Among
them are retail stores and shopping centers, office
buildings and factories, hospitals and medical centers,
and apartment buildings. Commercial mortgages have
grown in importance, representing 94 percent of U.S.
mortgages held by life insurers in 2009 vs. 91 percent
in 1989 (Figure 2.3).
Almost all of the mortgages held by life insurers were
in good standing (99.5%) in 2009. Of industry-held
mortgages, only 0.5 percent were either restructured,
overdue, or in foreclosure in 2009.
At year-end 2009, $16 billion (5%) was held in general
account mortgages with a loan-to-value ratio above 95
percent, compared with $227 billion (70%) in mortgages
with a loan-to-value ratio below 71 percent (Table 2.8).
rEal EstatE
U.S. life insurers’ holdings of directly owned real estate
were $28 billion at the end of 2009. This represents a
15 percent decrease from 2008 (Tables 2.9).
By the end of 2009 real estate amounted to 1 percent
of life insurers’ assets (Table 2.1). Real estate holdings
in separate accounts decreased $4 billion during the
year as real estate in general accounts decreased $575
million (Table 2.2).
Real estate held to produce income totaled $21
billion, or 75 percent of all real estate owned, while
real estate held for sale amounted to $510 million
10 American Council of Life Insurers
(Table 2.9, Figure 2.4). The remainder was in land and
property held for company use, primarily home and
regional offices.
Policy loans
Life insurance companies can loan money to policyholders
up to the cash value of their life insurance. Life insurers
must make these policy loans from funds that otherwise
would be invested. Since premium rates are based in
part on an anticipated investment return, interest must
be charged on the loans. Because the amount of a
policy’s protection is reduced by the amount of the loan,
life insurers advise policyholders that an outstanding
loan can seriously impair a family’s insurance planning.
The policy loan amounts shown in Tables 2.1–2.2 do not
include loans made to policyholders by banks or other
lending institutions holding borrowers’ life insurance
policies as collateral.
Life insurer loans to policyholders against the cash value
of their life insurance amounted to $123 billion by year-
end 2009, up from the loans outstanding a year earlier
(Tables 2.1–2.2). Policy loans accounted for 3 percent
of company assets at the end of 2009.
MiscEllanEous assEts
U.S. life insurers held $504 billion at the end of 2009 in
miscellaneous assets (Table 2.1), which has two major
components. Due and deferred premiums refers to
premiums not yet received at year’s end for which life
insurance companies have established reserves. Due
and accrued investment income is income earned but
not yet received by year’s end, such as interest.
Another main item in this category is cash holdings.
Relatively moderate amounts of cash are held for
providing prompt payments to beneficiaries, policy
loans, and other services.
ForEign-controllEd assEts
Foreign-controlled assets were $1.14 trillion, or 23
percent, of total industry assets in 2009, up from $1.05
trillion in 2008 (Table 2.10). The Netherlands, followed
by Canada, the United Kingdom, and France own the
most foreign-controlled assets of U.S. life insurers.
11Assets
Table 2.1distribution of life insurer assets, by account type, 2009 (millions)
General account Separate account Combined accounts
Year’s Percent Year’s Percent Year’s Percent end distribution end distribution end distribution
Bonds Government securities U.S. $236,693 7.1 $34,387 2.1 $271,080 5.5 Foreign 56,167 1.7 3,935 0.2 60,103 1.2 Total government 292,860 8.8 38,323 2.3 331,183 6.7
Corporate securities 1,507,604 45.4 85,130 5.2 1,592,735 32.1
Mortgage-backed securities1 561,136 16.9 96,522 5.9 657,658 13.3
Total long-term bonds 2,361,600 71.0 219,975 13.5 2,581,575 52.1
Stocks Common 65,597 2.0 1,307,460 80.0 1,373,058 27.7 Preferred 12,125 0.4 739 0.0 12,865 0.3
Total 77,723 2.3 1,308,200 80.0 1,385,923 27.9
Mortgages
Farm 17,550 0.5 211 0.0 17,761 0.4 Residential 4,393 0.1 54 0.0 4,447 0.1 Commercial 303,999 9.1 10,109 0.6 314,108 6.3
Total 325,942 9.8 10,374 0.6 336,316 6.8
Real estate 19,772 0.6 7,942 0.5 27,714 0.6
Policy loans 122,707 3.7 576 0.0 123,283 2.5
Short-term investments 89,608 2.7 19,143 1.2 108,751 2.2
Cash & cash equivalents 36,285 1.1 16,156 1.0 52,442 1.1
Other invested assets 130,597 3.9 32,953 2.0 163,550 3.3
Non-invested assets 160,028 4.8 19,114 1.2 179,141 3.6
Aggregate total 3,324,262 100.0 1,634,432 100.0 4,958,693 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data reflect investments held at year’s end. Data represent U.S. life insurers and fraternal benefit societies.1Includes Ginnie Mae (GNMA).
12 American Council of Life Insurers
Table 2.2distribution of life insurer assets, by account type and year1
General account (millions) Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Bonds Government $309,611 $222,444 $292,860 -0.6 31.7 Corporate 1,096,452 1,463,701 1,507,604 3.2 3.0 MBS1 NA 529,922 561,136 NA 5.9
Total 1,406,064 2,216,067 2,361,600 5.3 6.6
Stocks Common 80,189 52,510 65,597 -2.0 24.9 Preferred 20,135 65,061 12,125 -4.9 -81.4
Total 100,324 117,571 77,723 -2.5 -33.9
Mortgages 224,607 338,008 325,942 3.8 -3.6
Real estate 25,270 20,347 19,772 -2.4 -2.8
Policy loans 97,510 121,887 122,707 2.3 0.7
Short-term investments NA 86,895 89,608 NA 3.1
Cash & cash equivalents 4,558 63,197 36,285 23.1 -42.6
Other invested assets 40,418 143,789 130,597 12.4 -9.2
Non-invested assets 75,822 162,569 160,028 7.8 -1.6
Aggregate total 1,974,572 3,270,330 3,324,262 5.3 1.6
continued
Figure 2.1growth of life insurer assets
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
4,9595,092
4,4823,887
3,2693,0712,579
2,1441,839
1,5511,300
$Billions
20092007200520032001199919971995199319911989
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers, and, as of 2003, fraternal benefit societies.
5,000
4,000
3,000
2,000
1,000
13Assets
Separate account (millions) Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Bonds Government $52,031 $38,298 $38,323 -3.0 0.1 Corporate 93,523 71,364 85,130 -0.9 19.3 MBS1 NA 103,444 96,522 NA -6.7
Total 145,555 213,106 219,975 4.2 3.2
Stocks Common 888,737 1,015,848 1,307,460 3.9 28.7 Preferred 701 2,378 739 0.5 -68.9
Total 889,438 1,018,226 1,308,200 3.9 28.5
Mortgages 5,190 14,668 10,374 7.2 -29.3
Real estate 12,916 12,150 7,942 -4.7 -34.6
Policy loans 1,246 598 576 -7.4 -3.7
Short-term investments NA 20,618 19,143 NA -7.2
Cash & cash equivalents 639 21,001 16,156 38.1 -23.1
Other invested assets 36,794 43,904 32,953 -1.1 -24.9
Non-invested assets 4,304 33,545 19,114 16.1 -43.0
Aggregate total 1,096,081 1,377,816 1,634,432 4.1 18.6
Combined accounts (millions) Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Bonds Government $361,643 $260,742 $331,183 -0.9 27.0 Corporate 1,189,976 1,535,065 1,592,735 3.0 3.8 MBS1 NA 633,366 657,658 NA 3.8
Total 1,551,618 2,429,173 2,581,575 5.2 6.3
Stocks Common 968,926 1,068,358 1,373,058 3.5 28.5 Preferred 20,836 67,438 12,865 -4.7 -80.9
Total 989,762 1,135,797 1,385,923 3.4 22.0
Mortgages 229,797 352,676 336,316 3.9 -4.6
Real estate 38,186 32,497 27,714 -3.2 -14.7
Policy loans 98,756 122,485 123,283 2.2 0.7
Short-term investments NA 107,513 108,751 NA 1.2
Cash & cash equivalents 5,197 84,198 52,442 26.0 -37.7
Other invested assets 77,212 187,693 163,550 7.8 -12.9
Non-invested assets 80,126 196,114 179,141 8.4 -8.7
Aggregate total 3,070,653 4,648,147 4,958,693 4.9 6.7
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data reflect investments held at year’s end. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Includes Ginnie Mae (GNMA).
Table 2.2 distribution of life insurer assets, by account type and year—continued
14 American Council of Life Insurers
Table 2.3distribution of long-term general account Bond investments
2008 2009
Amount Percent Amount Percent (millions) distribution (millions) distribution
U.S. Treasury securities $71,576 3.2 $101,114 4.3
U.S. government obligations 62,745 2.8 64,291 2.7
Foreign government 43,902 2.0 56,167 2.4
U.S. states and territories 8,805 0.4 11,638 0.5
U.S. political subdivisions 7,034 0.3 12,712 0.5
Revenue and assessment 26,862 1.2 45,041 1.9
Industrial development 1,518 0.1 1,898 0.1
Mortgage-backed securities 529,922 23.9 561,136 23.8
Pass-through securities
GNMA 14,750 0.7 17,858 0.8
FNMA and FHLMC 83,897 3.8 93,211 3.9
Privately Issued 27,351 1.2 18,395 0.8
CMOs and REMICs GNMA, FNMA, FHLMC or VA 138,223 6.2 128,835 5.5
Privately issued and collateralized by MBS 35,399 1.6 32,801 1.4
All other privately issued 230,301 10.4 270,035 11.4
Other
Unaffiliated securities 1,439,752 65.0 1,490,716 63.1
Affiliated securities 23,950 1.1 16,888 0.7
Total 2,216,067 100.0 2,361,600 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Figure 2.2asset distribution of life insurers, 2009
GENERAL ACCOUNT
Stocks2%
Miscellaneous assets13%
Policy loans4%
Mortgages and real estate10%
Bonds71%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
SEPARATE ACCOUNT
Stocks80%
Bonds14%
Miscellaneous assets5%
Mortgages and real estate1%
15Assets
Table 2.4distribution of general account Bonds, by remaining Maturity, 2005–2009
Percentage of general account bonds held at year’s end
More than More than More than 1 year 1 year 5 years 10 years More than or less to 5 years to 10 years to 20 years 20 years Total
Government 2005 8.2 21.8 24.7 24.8 20.5 100.0 2006 8.9 21.4 24.3 24.2 21.2 100.0 2007 8.3 19.9 23.1 25.9 22.8 100.0 2008 15.0 19.4 20.6 21.6 23.3 100.0
2009 11.1 22.6 20.2 21.1 25.0 100.0
Corporate 2005 9.0 27.4 35.9 11.0 16.7 100.0 2006 9.5 29.6 34.3 10.9 15.8 100.0 2007 10.0 29.2 32.9 11.0 16.9 100.0 2008 10.5 31.2 32.1 10.3 15.8 100.0
2009 10.1 30.9 31.3 10.0 17.7 100.0
Total 2005 8.8 26.2 33.3 14.1 17.6 100.0 2006 9.3 27.8 32.1 13.8 17.0 100.0 2007 9.7 27.3 30.9 14.1 18.1 100.0 2008 11.5 28.6 29.6 12.8 17.5 100.0
2009 10.3 28.9 28.7 12.6 19.4 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Table 2.5distribution of general account Bonds at time of Purchase, 2009
Maturity Percent distribution
20 years and over 33.510 years to less than 20 years 27.95 years to less than 10 years 30.0Less than 5 years 8.6
Total 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
16 American Council of Life Insurers
Table 2.6distribution of general account Bonds, by naic quality class1
PUBLIC BONDS 1999 2008 2009
Percentage of Percentage of Percentage of Amount publicly Amount publicly Amount publicly NAIC quality class (millions) traded bonds (millions) traded bonds (millions) traded bonds
High quality Class 1 $741,773 70.5 $1,323,392 74.2 $1,338,884 72.0 Class 2 247,323 23.5 375,042 21.0 414,793 22.3
Medium quality Class 3 34,529 3.3 48,260 2.7 62,550 3.4
Low quality Class 4 25,898 2.5 23,862 1.3 29,666 1.6 Class 5 2,529 0.2 9,873 0.6 10,340 0.6 Class 6 526 0.0 2,260 0.1 2,813 0.2Total 1,052,578 100.0 1,782,690 100.0 1,859,047 100.0
PRIVATE BONDS 1999 2008 2009
Percentage of Percentage of Percentage of Amount privately Amount privately Amount privately NAIC quality class (millions) traded bonds (millions) traded bonds (millions) traded bonds
High quality Class 1 $166,224 47.0 $267,293 47.1 $283,974 46.0 Class 2 147,465 41.7 236,206 41.6 252,334 40.9
Medium quality Class 3 23,803 6.7 36,705 6.5 43,380 7.0
Low quality
Class 4 11,632 3.3 16,653 2.9 21,209 3.4 Class 5 3,529 1.0 8,505 1.5 12,516 2.0
Class 6 833 0.2 2,234 0.4 3,284 0.5
Total 353,486 100.0 567,595 100.0 616,697 100.0
TOTAL BONDS 1999 2008 2009
Percentage of Percentage of Percentage of Amount general Amount general Amount general NAIC quality class (millions) account bonds (millions) account bonds (millions) account bonds
High quality Class 1 $907,998 64.6 $1,590,685 67.7 $1,622,858 65.6 Class 2 394,787 28.1 611,248 26.0 667,127 26.9
Medium quality
Class 3 58,332 4.1 84,965 3.6 105,929 4.3
Low quality Class 4 37,530 2.7 40,515 1.7 50,875 2.1 Class 5 6,058 0.4 18,378 0.8 22,856 0.9 Class 6 1,359 0.1 4,494 0.2 6,098 0.2
Aggregate total 1,406,064 100.0 2,350,285 100.0 2,475,744 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Figures include both government and corporate bonds held in corporate general accounts of U.S. life insurers and, as of 2003, fraternal benefit societies.NAIC bond classes are: Class 1—highest quality; Class 2—high quality; Class 3—medium quality; Class 4—low quality; Class 5—lower quality; Class 6—in or near default. Class 1 and Class 2 bonds are investment grade. 1Includes long-term bonds, short-term investments, and cash equivalents.
17Assets
Figure 2.4real Estate owned by life insurers, 2009
Investment, held for income75%
Investment, held for sale2%
Occupied by company23%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Figure 2.3Mortgages Held by life insurers, by type
Commercial91%
1–4 Family dwelling5%
Farm4%
1989 2009
Commercial94%
1–4 Family dwelling1%
Farm5%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
18 American Council of Life Insurers
Table 2.7quality of Mortgages Held by life insurers (millions)
1999 2008 2009
Percent Percent Percent Amount distribution Amount distribution Amount distribution
Farm In good standing $12,411 97.4 $18,671 100.0 $17,747 99.9 Restructured 219 1.7 1 0.0 10 0.1 Overdue 81 0.6 5 0.0 3 0.0 Foreclosed 25 0.2 0 0.0 0 0.0
Total 12,736 100.0 18,678 100.0 17,761 100.0
Residential In good standing 5,613 98.8 5,358 99.3 4,380 98.5 Restructured 1 0.0 0 0.0 30 0.7 Overdue 34 0.6 18 0.3 19 0.4 Foreclosed 34 0.6 21 0.4 18 0.4
Total 5,682 100.0 5,397 100.0 4,447 100.0
Commercial In good standing 206,924 97.9 328,077 99.8 312,493 99.5 Restructured 3,905 1.8 214 0.1 845 0.3 Overdue 299 0.1 124 0.0 473 0.2 Foreclosed 252 0.1 188 0.1 297 0.1
Total 211,380 100.0 328,602 100.0 314,108 100.0
All categories In good standing 224,947 97.9 352,107 99.8 334,620 99.5 Restructured 4,125 1.8 215 0.1 886 0.3 Overdue 413 0.2 146 0.0 495 0.1 Foreclosed 311 0.1 208 0.1 315 0.1
Aggregate total 229,797 100.0 352,676 100.0 336,316 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
19Assets
Table 2.8general account Mortgages for life insurers, by type and loan-to-Value ratios, 2009 (millions)
Loan-to-value ratio Farm Non-Farm Total
Above 95% $61 $15,487 $15,54991–95% 17 6,017 6,03481–90% 41 24,560 24,60171–80% 382 52,417 52,798Below 71% 17,049 209,911 226,960Total 17,550 308,392 325,942
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Table 2.9real Estate owned by life insurers, by type
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Investment propertyHeld for income NA $26,013 $20,868 NA -19.8Held for sale NA 392 510 NA 30.2
Total1 $31,991 26,405 21,379 -4.0 -19.0
Occupied by company 6,195 6,093 6,335 0.2 4.0
Aggregate total 38,186 32,497 27,714 -3.2 -14.7
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.1Prior to 2001, includes properties acquired in the satisfaction of debt and investment real estate.
20 American Council of Life Insurers
Table 2.10Foreign-controlled assets of u.s. life insurers, by country and year (millions)
2005 2006 2007 2008 2009
Barbados — $516 $564 $569 $716
Bermuda 201 1,554 1,665 2,425 3,343
Canada 281,122 311,861 333,142 294,401 333,777
Cayman Islands 4,625 4,779 4,526 3,112 2,764
France 140,055 155,874 165,796 133,533 148,828
Germany 59,541 69,779 76,323 76,445 86,188
Italy 671 732 801 831 913
Japan 618 617 608 589 593
Netherlands 344,065 354,661 390,678 349,225 359,240
South Africa 37 34 28 23 9
Spain 131 139 154 178 193
Sweden 1 1 1 1 1
Switzerland 55,861 54,875 57,431 56,334 55,345
United Kingdom 94,737 125,531 136,041 135,786 149,075
Total 981,665 1,080,953 1,167,757 1,053,451 1,140,986
Percentage of industry assets 21.9% 22.4% 22.9% 22.7% 23.0%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Companies are defined as foreign controlled if more than 50 percent of stock is owned by a foreign entity or entities.
21Assets
Table 2.11asset distribution of life insurers, by year (millions)
Real Policy MiscellaneousYear Bonds Stocks Mortgages estate loans assets Total
1917 $2,537 $83 $2,021 $179 $810 $311 $5,9411920 3,298 75 2,442 172 859 474 7,3201925 4,333 81 4,808 266 1,446 604 11,5381930 6,431 519 7,598 548 2,807 977 18,8801935 10,041 583 5,357 1,990 3,540 1,705 23,2161940 17,092 605 5,972 2,065 3,091 1,977 30,8021945 32,605 999 6,636 857 1,962 1,738 44,7971950 39,366 2,103 16,102 1,445 2,413 2,591 64,0201955 47,741 3,633 29,445 2,581 3,290 3,742 90,4321960 58,555 4,981 41,771 3,765 5,231 5,273 119,5761965 70,152 9,126 60,013 4,681 7,678 7,234 158,8841970 84,166 15,420 74,375 6,320 16,064 10,909 207,2541975 121,014 28,061 89,167 9,621 24,467 16,974 289,3041980 212,618 47,366 131,080 15,033 41,411 31,702 479,2101981 233,308 47,670 137,747 18,278 48,706 40,094 525,8031982 268,288 55,730 141,989 20,624 52,961 48,571 588,1631983 308,738 64,868 150,999 22,234 54,063 54,046 654,9481984 358,897 63,335 156,699 25,767 54,505 63,776 722,9791985 421,446 77,496 171,797 28,822 54,369 71,971 825,9011986 486,583 90,864 193,842 31,615 54,055 80,592 937,5511987 557,110 96,515 213,450 34,172 53,626 89,586 1,044,4591988 640,094 104,373 232,863 37,371 54,236* 97,933 1,166,8701989 716,204 125,614 254,215 39,908 57,439 106,376 1,299,7561990 793,443 128,484 270,109 43,367 62,603 110,202 1,408,2081991 893,005 164,515 265,258 46,711 66,364 115,348 1,551,2011992 990,315 192,403 246,702 50,595 72,058 112,458 1,664,5311993 1,113,853 251,885 229,061 54,249 77,725 112,354 1,839,1271994 1,186,139 281,816 215,332 53,813 85,499 119,674 1,942,2731995 1,278,416 371,867 211,815 52,437 95,939 133,070 2,143,5441996 1,348,425 477,505 207,779 49,484 100,460 139,894 2,323,5471997 1,451,289 598,358 209,898 46,076 104,549 168,908 2,579,0781998 1,518,998 757,958 216,336 41,313 104,507 187,410 2,826,5221999 1,551,618 989,762 229,797 38,186 98,757 162,533 3,070,6532000 1,605,178 997,329 236,701 36,059 101,978 204,491 3,181,7362001 1,731,792 909,026 243,596 32,368 104,273 247,966 3,269,0192002 1,955,548 791,429 250,531 32,848 105,229 244,414 3,380,0002003 ‡ 2,181,555 1,022,188 268,986 30,673 107,007 276,291 3,886,6992004 ‡ 2,347,322 1,179,858 282,534 31,005 108,658 303,470 4,252,8462005 ‡ 2,440,412 1,285,468 294,876 32,574 109,500 319,165 4,481,9952006 ‡ 2,461,479 1,530,892 313,741 33,096 112,914 370,701 4,822,8242007 ‡ 2,571,525 1,670,338 336,150 34,943 116,633 361,997 5,091,5862008 ‡ 2,429,173 1,135,797 352,676 32,497 122,485 575,518 4,648,1472009 ‡ 2,581,575 1,385,923 336,316 27,714 123,283 503,884 4,958,693
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Beginning with 1962, data include assets in separate accounts. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.*Excludes an estimated $600 million of securitized policy loans.‡Includes fraternal benefit societies.
22 American Council of Life Insurers
The liabilities of U.S. life insurers primarily comprise
the reserves held by each insurer to back its obligations
to policyholders and their beneficiaries. Of the many
different kinds of reserves, policy and asset fluctuation
reserves are the most important. Liabilities also include
small amounts of other funds and obligations.
Based on standard accounting principles applied to all
businesses, total liabilities plus the company’s net value
must equal its total assets. Net value is a company’s surplus
plus its capital stock and is available to support policyholder
claims if necessary.
Policy ReseRves
Policy reserves concern an insurer’s obligation to its
customers arising from its product in force. State law
requires each company to maintain its policy reserves at a
level that will assure payment of all policy obligations as
they fall due. That level is calculated on an actuarial basis,
taking into account funds from future premium payments,
assumed future interest earnings, and expected mortality
experience. At the end of 2009, policy reserves of U.S. life
insurers totaled $3.8 trillion, almost 10 percent higher than
2008 (Table 3.1).
Policy reserves are held and identified for each type of
business conducted by a life insurer:
n Life insurance policies
n Annuities and supplementary contracts
n Health insurance policies
The composition of life insurer policy reserves has changed
over the years, reflecting a shift in the basic types of business
undertaken. Annuity contract reserves now account for a
larger proportion of total policy reserves, while reserves set
aside for life insurance policies have a lesser share.
In 2009, reserves for life insurance comprised 31 percent
of total policy reserves, reaching $1.2 trillion (Figure 3.2,
Table 3.2). This proportion has shrunk from 1980, when life
insurance products commanded 51 percent of total reserves
(Table 3.6). In 2009, these reserves consisted of $1 trillion
for individual life policies, $134 billion for group policies,
and around $1 billion for credit life policies (Table 3.2).
By contrast, reserves for annuities and supplementary
contracts climbed to nearly two-thirds of total reserves in
2009 (64%), or $2.4 trillion, from 44 percent in 1980. Much
of the increase reflects the strong growth in retirement plans
administered by life insurers.
In 2009, annuity reserves consisted of $1.6 trillion for
individual annuities, up 14 percent from 2008, and $798
billion for group annuities, up 12 percent. General account
annuity reserves increased by five percent while separate
account reserves increased by 23 percent (Table 3.2). Group
annuity reserves had fallen significantly in 2001, primarily
due to accounting codification rather than actual fluctuation.
In 2000, liabilities for guaranteed interest contracts (GICs)
and premium and other deposit funds had been reported
as annuity reserves; however, as of 2001 these amounts
were counted as liabilities for deposit-type contracts. Since
most GICs and other deposit-type funds are under group
contracts, this accounting change has had a substantial effect
on group annuity reserves.
3 liABiliTies
24 American Council of Life Insurers
Reserves held under supplementary contracts with life
contingencies in 2009 totaled $16 billion, and for health
insurance policies, $196 billion.
DePosiT-TyPe conTRAcTs
Contracts issued by life insurers that do not incorporate
mortality or morbidity risks are known as deposit-type
contracts. Benefit payments under these contracts are not
contingent upon death or disability as they are in life and
disability insurance contracts, or upon continued survival
as they are in annuity contracts. Categories of deposit-
type contracts, as defined by the National Association
of Insurance Commissioners (NAIC), include GICs,
supplementary contracts without life contingencies,
annuities certain, premium and other deposit funds,
dividend and coupon accumulations, lottery payouts,
and structured settlements.
Under codified statutory accounting practices
implemented in 2001, cash inflows and outflows on
deposit-type contracts are no longer reported as income
and expenditure. Instead, they are recorded directly as
increasing or decreasing reserves. During 2009, $139
billion was deposited to these contracts and $209 billion
was withdrawn, with a total reserve of $416 billion at
year’s end (Table 3.3).
In 2009, premium and other deposit funds surpassed GICs
as the largest category of the deposit-type business with
$68 billion in deposits, $84 billion in payments, and $175
billion in reserve at year-end. GICs received $46 billion from
policyholders and paid out $97 billion in 2009, leaving a
reserve of $144 billion at year’s end.
AsseT FlucTuATion ReseRves
Besides policy reserves, insurers are required to establish
two statutory reserves to absorb gains and losses in their
invested assets.
The asset valuation reserve (AVR) absorbs both realized
and unrealized, credit-related capital gains and losses.
The AVR consists of a default component, which provides
for credit-related losses on fixed-income assets, and an
equity component, which provides for all types of equity
investments.
The interest maintenance reserve (IMR) captures all
realized, interest-related capital gains and losses on
fixed-income assets. The IMR amortizes these gains
and losses into income over the remaining life of the
investments sold.
In 2009, the industry’s total AVR decreased almost three
percent to $21 billion, and its IMR increased 15 percent to
less than $11 billion (Table 3.1).
oTheR liABiliTies
In addition to reserves, other liability funds of U.S. life
insurers at the end of 2009 included $42 billion in policy
and contract claims; $18 billion set aside for the following
year’s dividend payments to policyholders; and $321 billion
for liabilities not directly allocable to policyholders—incurred
expenses, mandatory reserves for fluctuations in security
values, and insurance premiums paid in advance, for
example (Table 3.1).
suRPlus FunDs AnD cAPiTAl sTock
Surplus and capital amounted to $301 billion for U.S. life
insurers at the end of 2009 (Table 3.1). Surplus funds provide
extra reserve safeguards for such contingencies as an
unexpected rise in death rates among policyholders, unusual
changes in the value of securities, and general protection for
policy obligations. Several factors influence the amount of
surplus that a life insurer retains, including company size,
kinds of insurance written, mortality experience, general
business conditions, and government regulation. Capital
refers to the total par value of shares of the companies’
capital stock.
cAPiTAl RATios
One measure of the adequacy of a life insurer’s surplus is
its capital ratio: surplus funds plus capital stock plus AVR
as a percentage of general account assets. Theoretically,
the higher the capital ratio, the better a company is able
to withstand adverse investment and mortality experience.
However, the type of company and the distribution of its
book of business can make comparisons among companies
and with an industry wide average much less meaningful.
In 2009, the aggregate capital ratio of U.S. life insurers was
10 percent (Table 3.4).
25Liabilities
Life insurance regulators created the risk-based capital (RBC)
ratio to monitor life insurance company solvency.
Risk-based capital, calculated according to an NAIC model
law, is considered the minimum amount of capital an insurer
needs to avoid triggering regulatory action. The RBC ratio
is total adjusted capital divided by risk-based capital, for a
threshold ratio of 100 percent. The ratio provides a means
for evaluating the adequacy of an insurer’s capital relative
to the risks inherent in the insurer’s operations.
From 1993 when life insurers began reporting risk-based
capital, the average RBC ratio rose steadily to a plateau of
290 percent in 1997, which remained unbroken until 2001
(Table 3.5). That year, the ratio jumped to 346 percent,
mainly due to two changes enacted by NAIC: accounting
codification and an adjusted RBC formula that reflects
changed risks for assets. In 2009, the ratio rose 36 percentage
points from 2008 level to 418 percent.
Most companies have an RBC ratio well above the regulatory
minimum level of 100 percent. By year-end 2009, 812
companies, or 90 percent of life insurers, had a ratio of 200
percent or more. These companies carried 99 percent of
the industry’s total assets.
Table 3.1liabilities and surplus Funds of life insurers
Generalaccount(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
ReservesPolicy reserves1 $1,539,700 $2,280,047 $2,373,867 4.4 4.1Other reserves Liabilities for deposit-type contracts2 40,500 344,098 288,533 21.7 -16.1 Asset valuation reserve (AVR) 40,089 21,243 20,667 -6.4 -2.7 Policy and contract claims 31,096 42,493 42,358 3.1 -0.3 Funds set aside for policyholder dividends 17,356 18,582 17,591 0.1 -5.3 Interest maintenance reserve (IMR) 12,119 9,439 10,789 -1.2 14.3 Miscellaneous reserves3 NA 17,325 16,652 NA -3.9
Total other reserves 141,160 453,182 396,590 10.9 -12.5
Total reserves 1,680,860 2,733,229 2,770,456 5.1 1.4
Non-reserveliabilities 115,772 276,181 255,813 8.3 -7.4Total liabilities 1,796,633 3,009,410 3,026,270 5.4 0.6
Capitalandsurplus 177,939 260,921 297,992 5.3 14.2Total liabilities and surplus funds 1,974,572 3,270,330 3,324,262 5.3 1.6
Separateaccount(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
ReservesPolicy reserves1 $1,049,364 $1,190,819 $1,438,384 3.2 20.8Other reserves Liabilities for deposit-type contracts2 1,170 109,761 127,945 59.9 16.6 Interest maintenance reserve (IMR) 157 81 119 -2.7 46.0Total other reserves 1,326 109,843 128,064 57.9 16.6Total reserves 1,050,690 1,300,662 1,566,448 4.1 20.4
Non-reserveliabilities 42,082 74,796 64,754 4.4 -13.4Total liabilities 1,092,772 1,375,458 1,631,202 4.1 18.6
Surplus 3,309 2,358 3,229 -0.2 37.0Total liabilities and surplus funds 1,096,081 1,377,816 1,634,432 4.1 18.6
continued
26 American Council of Life Insurers
Table 3.1liabilities and surplus Funds of life insurers—continued
Combinedaccounts(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
ReservesPolicy reserves1 $2,589,064 $3,470,867 $3,812,251 3.9 9.8Other reserves Liabilities for deposit-type contracts2 41,670 453,860 416,478 NA -8.2 Asset valuation reserve (AVR) 40,089 21,243 20,667 -6.4 -2.7 Policy and contract claims 31,096 42,493 42,358 3.1 -0.3 Funds set aside for policyholder dividends 17,356 18,582 17,591 0.1 -5.3 Interest maintenance reserve (IMR) 12,275 9,521 10,908 -1.2 14.6 Miscellaneous reserves3 NA 17,325 16,652 NA -3.9
Total other reserves 142,487 563,024 524,654 13.9 -6.8
Total reserves 2,731,551 4,033,891 4,336,905 4.7 7.5
Non-reserveliabilities 157,854 350,977 320,568 NA -8.7Total liabilities 2,889,405 4,384,868 4,657,472 4.9 6.2
Capitalandsurplus 181,248 263,278 301,221 5.2 14.4Total liabilities and surplus funds 3,070,653 4,648,147 4,958,693 4.9 6.7
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.1Beginning in 2001, excludes reserves for guaranteed interest contracts (GICs).2Prior to 2001, included supplementary contracts without life contingencies, policyholder dividend accumulations; beginning in 2001, also includes liabilities for GICs, and premium and other deposits.3Includes insurance premiums paid in advance. The amount previously was included in non-reserve liabilities.
OtherAnnuities
Life
20092007200520032001199919971995199319911989
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
Growth of Life Insurers' Policy ReservesFigure 3.1
1,000
2,000
3,000
4,000
$Billions
27Liabilities
Table 3.2Policy Reserves of life insurers, by line of Business
Generalaccount(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsurance Individual $563,033 $874,521 $901,014 4.8 3.0
Group 28,569 53,977 52,018 6.2 -3.6
Credit 3,302 1,189 969 -11.5 -18.5
Total 594,903 929,687 954,001 4.8 2.6
Annuities1
Individual 500,576 850,374 901,716 6.1 6.0 Group 341,629 303,539 308,836 -1.0 1.7
Supplementary contracts with life contingencies 11,476 12,471 15,316 2.9 22.8
Total 853,681 1,166,385 1,225,868 3.7 5.1Healthinsurance Individual 61,011 133,954 142,203 8.8 6.2 Group 27,080 48,454 50,410 6.4 4.0
Credit 3,025 1,568 1,385 -7.5 -11.6
Total 91,116 183,976 193,998 7.9 5.4
Aggregate total 1,539,700 2,280,047 2,373,867 4.4 4.1
Separateaccount(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsurance
Individual $82,466 $125,470 $142,479 5.6 13.6
Group 27,857 79,314 81,809 11.4 3.1
Total 110,323 204,784 224,289 7.4 9.5
Annuities1 Individual 372,943 571,223 722,048 6.8 26.4
Group 565,552 412,048 489,152 -1.4 18.7
Supplementary contracts with life contingencies NA 636 761 NA 19.8
Total 938,494 983,907 1,211,962 2.6 23.2
Healthinsurance
Individual 1 228 276 NA 21.2
Group 545 1,901 1,857 13.0 -2.3
Total 546 2,129 2,133 14.6 0.2
Aggregate total 1,049,364 1,190,819 1,438,384 3.2 20.8
continued
28 American Council of Life Insurers
Figure 3.2Distribution of life insurers’ Policy Reserves, 2009
Annuities64%
Health Insurance5%
Life Insurance31%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
Distribution of Life Insurers’ Policy Reserves, 2009Figure 3.2
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Table 3.2Policy Reserves of life insurers, by line of Business—continued
Combinedaccount(millions) Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsurance
Individual $645,499 $999,991 $1,043,493 4.9 4.4
Group 56,426 133,291 133,828 9.0 0.4
Credit 3,302 1,189 969 -11.5 -18.5
Total 705,226 1,134,470 1,178,290 5.3 3.9
Annuities1
Individual 873,519 1,421,597 1,623,764 6.4 14.2
Group 907,181 715,587 797,989 -1.3 11.5
Supplementary contracts
with life contingencies 11,476 13,107 16,077 3.4 22.7
Total 1,792,176 2,150,291 2,437,830 3.1 13.4
Healthinsurance
Individual 61,012 134,182 142,479 8.9 6.2
Group 27,625 50,355 52,267 6.6 3.8
Credit 3,025 1,568 1,385 -7.5 -11.6
Total 91,662 186,105 196,131 7.9 5.4
Aggregate total 2,589,064 3,470,867 3,812,251 3.9 9.8
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit socieites.NA: Not available1As of 2001, excludes reserves for guaranteed interest contracts (GICs). Figures for GICs are presented in Table 3.3.
29Liabilities
Table 3.3Deposit-Type contracts, 2009 (millions)
Deposits Withdrawals Reserves
Generalaccount Guaranteed interest contracts (GICs) $38,543 $88,175 $91,268
Annuities certain 3,728 5,986 38,975
Supplementary contracts without life contingencies 20,304 19,493 34,782
Dividend accumulations or refunds 1,065 2,056 23,074
Premium and other deposit funds 50,498 71,401 100,433
Total 114,137 187,112 288,533
Separateaccount Guaranteed interest contracts (GICs) 7,660 9,046 52,841
Annuities certain 13 159 611
Supplementary contracts without life contingencies 9 29 135
Dividend accumulations or refunds 0 0 1
Premium and other deposit funds 17,010 12,737 74,357
Total 24,692 21,971 127,945
Combinedaccount Guaranteed interest contracts (GICs) 46,203 97,221 144,109
Annuities certain 3,740 6,145 39,586
Supplementary contracts without life contingencies 20,312 19,522 34,918
Dividend accumulations or refunds 1,065 2,056 23,075
Premium and other deposit funds 67,508 84,138 174,790
Total 138,829 209,084 416,478
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Table 3.4capital Ratios of life insurers (percent)
1999 2008 2009
IncludingAVR 11.1 8.7 9.7
ExcludingAVR 9.1 8.1 9.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Capital ratio is equal to capital plus surplus plus the asset valuation reserve (AVR) divided by general account assets. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
30 American Council of Life Insurers
Table 3.5levels of Risk-Based capital held by life insurers, 1999–2009
Numberofcompanies
Risk-basedcapitalratio1999 2000 20011 2002 2003 2004 2005 2006 2007 2008 2009
200 percent or more 1,125 1,061 1,046 1,002 1,051 1,026 997 948 892 830 812 175–199 37 44 37 31 30 18 19 19 23 31 29 150–174 39 28 29 25 24 21 16 22 11 17 20 125–149 32 31 31 30 30 25 15 21 13 19 15 100–124 18 19 14 13 18 13 10 5 5 8 10 Less than 100 percent 27 15 21 25 22 16 14 14 16 36 19
Total 1,278 1,198 1,178 1,126 1,175 1,119 1,071 1,029 960 941 905
Averagerisk-basedcapitalratio 283% 287% 346% 325% 357% 390% 409% 411% 406% 382% 418%
Percentageofcompanies(percent)
Risk-basedcapitalratio1999 2000 20011 2002 2003 2004 2005 2006 2007 2008 2009
200 percent or more 88.0 88.6 88.8 89.0 89.4 91.7 93.1 92.1 92.9 88.2 89.7 175–199 2.9 3.7 3.1 2.8 2.6 1.6 1.8 1.8 2.4 3.3 3.2 150–174 3.1 2.3 2.5 2.2 2.0 1.9 1.5 2.1 1.1 1.8 2.2 125–149 2.5 2.6 2.6 2.7 2.6 2.2 1.4 2.0 1.4 2.0 1.7 100–124 1.4 1.6 1.2 1.2 1.5 1.2 0.9 0.5 0.5 0.9 1.1 Less than 100 percent 2.1 1.3 1.8 2.2 1.9 1.4 1.3 1.4 1.7 3.8 2.1
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Distributionoftotalassets(percent)
Risk-basedcapitalratio1999 2000 20011 2002 2003 2004 2005 2006 2007 2008 2009
200 percent or more 91.4 96.6 96.5 96.8 98.3 98.4 98.8 99.0 99.4 97.0 98.7 175–199 3.0 2.2 2.2 1.6 0.4 0.1 0.5 0.2 0.2 2.2 0.2 150–174 0.7 0.3 0.4 0.3 0.4 0.5 0.4 0.3 0.0 0.5 0.5 125–149 0.5 0.7 0.8 0.8 0.3 0.9 0.2 0.4 0.4 0.1 0.5 100–124 0.1 0.1 0.0 0.4 0.4 0.0 0.0 0.0 0.0 0.0 0.0 Less than 100 percent 4.3 0.1 0.1 0.2 0.3 0.1 0.1 0.0 0.0 0.2 0.1
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Risk-based capital ratio is total adjusted capital divided by total risk-based capital. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Data reflect changes due to accounting codification and revisions in the risk-based capital formula.
31Liabilities
Table 3.6life insurers Policy Reserves, by line of Business and year (millions)
Year Amount Year Amount Year Amount Year Amount
1890 $670 1910 $3,226 1925 $9,927 1940 $27,2381900 1,443 1915 4,399 1930 16,231 1945 38,6671905 2,295 1920 6,338 1935 20,404 1950 54,946
Life Health Annuities1 SupplementaryYear insurance insurance Individual Group contracts2 Total
1955 $54,588 $575 * $13,216 $6,980 $75,3591960 70,791 865 $4,327 14,952 7,538 98,4731965 90,795 1,432 5,028 22,187 8,178 127,6201970 115,442 3,474 6,951 34,009 7,903 167,7791975 150,063 6,293 12,442 59,907 8,411 237,1161980 197,865 11,015 31,543 140,417 9,499 390,3391981 206,986 11,931 38,800 160,992 9,322 428,0311982 213,783 13,181 51,002 191,898 9,496 479,3601983 220,968 14,956 64,661 221,724 10,132 532,4411984 225,904 16,552 76,983 254,592 10,162 584,1931985 235,854 18,805 96,969 303,021 10,653 665,3021986 252,035 21,294 121,146 355,756 11,693 761,9241987 276,404 23,994 156,135 392,540 13,060 862,1331988 299,901 26,852 193,820 433,889 14,501 968,9631989 324,178 29,855 239,593 473,934 16,118 1,083,6781990 348,774 33,448 282,129 515,794 16,822 1,196,9671991 372,082 38,225 328,325 548,191 17,955 1,304,7781992 402,413 45,159 380,677 559,774 19,068 1,407,0911993 436,293 51,386 439,390 601,836 20,898 1,549,8031994 468,469 58,019 482,172 612,394 22,989 1,644,0431995 511,021 63,233 594,147 618,666 25,258 1,812,3251996 556,133 69,567 622,012 690,482 27,596 1,965,7901997 606,260 74,902 693,011 761,951 28,435 2,164,5591998 655,983 82,020 763,329 845,164 30,952 2,377,4491999 705,226 91,662 873,519 907,181 32,338 2,609,9262000 741,603 95,704 880,874 960,128 33,542 2,711,8512001 815,544 100,706 944,961 571,451 13,309 2,445,9722002 832,927 110,768 980,065 569,856 13,699 2,507,3142003‡ 921,142 123,451 1,172,623 662,474 15,315 2,895,0032004‡ 987,568 133,641 1,311,552 712,149 15,587 3,160,4972005‡ 1,029,486 140,895 1,415,104 758,484 15,847 3,359,8152006‡ 1,109,868 153,104 1,521,074 806,944 16,753 3,607,7432007‡ 1,148,256 166,148 1,615,276 843,146 17,819 3,790,6452008‡ 1,134,470 186,105 1,421,597 715,587 13,107 3,470,8672009‡ 1,178,290 196,131 1,623,764 797,989 16,077 3,812,251
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Before 1947, the business of health insurance departments of life insurers was not included in this series. Codification effective with 2001 Annual Statement filings changed the reporting of annuities. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.*Included with group annuities.‡Includes fraternal benefit societies.1Beginning in 2001, excludes reserves for guaranteed interest contracts (GICs). Figures for GICs are shown in Table 3.3.2Beginning in 2001, includes reserves for supplementary contracts with life contingencies; reserves for supplementary contracts without life contingencies are included in liabilities for deposit-type contracts in Table 3.3.
32 American Council of Life Insurers
Table 3.7life insurance Policy Reserves, by Type and year (millions)
Year Individual Group Credit Total
1956 $56,875 $787 -- $57,6621960 69,524 1,267 -- 70,7911965 88,784 2,011 -- 90,7951970 112,349 3,093 -- 115,4421975 144,368 4,995 $700 150,0631980 187,872 8,818 1,175 197,8651981 196,407 9,379 1,200 206,9861982 202,789 9,766 1,228 213,7831983 209,466 10,148 1,354 220,9681984 215,309 9,111 1,484 225,9041985 224,204 9,927 1,723 235,8541986 239,295 10,770 1,970 252,0351987 263,515 10,559 2,330 276,4041988 285,853 11,581 2,467 299,9011989 309,168 12,569 2,441 324,1781990 332,808 13,506 2,460 348,7741991 355,719 13,950 2,413 372,0821992 381,323 18,684 2,406 402,4131993 412,542 21,336 2,415 436,2931994 441,894 23,911 2,664 468,4691995 480,967 27,342 2,712 511,0211996 523,901 29,396 2,836 556,1331997 565,601 37,787 2,872 606,2601998 608,283 44,515 3,184 655,9831999 645,499 56,426 3,302 705,2262000 679,546 58,493 3,564 741,6032001 720,583 91,563 3,398 815,5442002 746,383 83,742 2,802 832,9272003‡ 827,892 91,049 2,200 921,1422004‡ 881,817 103,931 1,820 987,5682005‡ 923,429 104,463 1,594 1,029,4862006‡ 988,620 119,841 1,407 1,109,8682007‡ 1,011,179 135,733 1,343 1,148,2562008‡ 999,991 133,291 1,189 1,134,4702009‡ 1,043,493 133,828 969 1,178,290
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Credit life insurance is limited to insurance on loans of 10 years’ or less duration. Prior to 1973, all credit insurance was included in the individual and group categories. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.
33Liabilities
Table 3.8life insurer liabilities and surplus Funds, by year (millions)
Mandatory Liabilities Funds securities Interest Capital fordeposit- setaside Policyand orasset main- and Policy type forpolicy Other contract valuation tenance surplusYear reserves contracts1 dividends obligations claims2 reserves3 reserve funds Total
1952 $62,579 $1,675 $841 $3,024* -- NA -- $5,256 $73,3751955 75,359 2,239 1,201 3,562 -- $1,063 -- 7,008 90,4321960 98,473 3,381 1,780 4,851 -- 1,417 -- 9,674 119,5761965 127,620 4,326 2,647 7,295 -- 3,160 -- 13,836 158,8841970 167,779 6,068 3,540 10,295 -- 2,249 -- 17,323 207,2541975 237,116 8,814 4,875 16,241 -- 1,695 -- 20,563 289,3041980 390,339 12,727 7,659 27,701 -- 6,426 -- 34,358 479,2101981 428,031 13,261 8,355 33,223 -- 5,511 -- 37,422 525,8031982 479,360 13,706 8,914 38,001 -- 6,731 -- 41,451 588,1631983 532,441 13,939 10,078 44,022 -- 8,084 -- 46,384 654,9481984 584,193 14,395 10,745 55,955 -- 7,344 -- 50,347 722,9791985 665,302 14,638 11,710 66,932 -- 10,539 -- 56,780 825,9011986 761,924 15,174 11,704 69,270 -- 15,330 -- 64,149 937,5511987 862,133 15,837 12,043 71,063 -- 16,013 -- 67,370 1,044,4591988 968,963 16,601 12,478 75,939 -- 17,939 -- 74,950 1,166,8701989 1,083,678 17,278 13,373 82,306 -- 19,438 -- 83,683 1,299,7561990 1,196,967 18,000 13,921 73,164 -- 14,783 -- 91,373 1,408,2081991 1,304,778 18,531 13,196 89,804 -- 18,854 -- 106,038 1,551,2011992 1,407,091 19,189 13,102 85,212 -- 20,801 $3,899 115,237 1,664,5311993 1,549,803 19,619 13,172 72,525 $20,680 25,063 10,245 128,020 1,839,1271994 1,644,043 19,702 13,150 74,646 21,993 25,010 6,988 136,741 1,942,2731995 1,812,325 19,950 13,739 83,923 23,987 29,676 9,000 150,944 2,143,5441996 1,965,790 20,441 14,863 111,629 25,399 33,202 9,360 147,240 2,327,9241997 2,164,559 20,456 16,197 141,042 29,181 36,159 11,398 160,086 2,579,0781998 2,377,449 20,520 16,831 155,266 31,309 37,882 14,567 172,695 2,826,5201999 2,609,920 20,808 17,356 157,860 31,096 40,089 12,275 181,248 3,070,6532000 2,711,851 21,149 18,137 162,300 33,161 37,893 8,746 188,499 3,181,7362001 2,445,972 337,713 18,689 193,263 35,721 30,603 8,507 190,727 3,269,0192002 2,507,314 363,514 18,489 220,160 35,043 22,851 10,310 202,318 3,380,0002003‡ 2,895,003 410,554 18,825 251,209 37,202 29,187 14,890 231,321 3,888,1902004‡ 3,160,497 445,431 18,416 287,628 37,880 35,125 17,764 249,644 4,252,3862005‡ 3,359,815 456,325 18,810 300,912 36,719 37,832 17,011 254,572 4,481,9952006‡ 3,607,743 487,490 19,494 345,648 39,361 43,389 13,827 265,872 4,822,8242007‡ 3,790,645 516,905 20,134 383,090 41,120 45,913 11,948 281,831 5,091,5862008‡ 3,470,867 453,860 18,582 368,303 42,493 21,243 9,521 263,278 4,648,1472009‡ 3,812,251 416,478 17,591 337,219 42,358 20,667 10,908 301,221 4,958,693
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of annuities and deposit-type funds, as explained in footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.‡Includes fraternal benefit societies.1Prior to 2001, represents policyholder dividend accumulations. Beginning in 2001, includes liabilities for guaranteed interest contracts, supplementary contracts without life contingencies, policyholder dividend accumulations, and premium and other deposits.2Prior to 1993, included with other obligations.3Beginning in 1992, asset valuation reserve replaced mandatory securities valuation reserve.
34 American Council of Life Insurers
Table 3.9capital Ratios of life insurers, by year (percent)
Including Excluding Including ExcludingYear MSVR/AVR MSVR/AVR Year MSVR/AVR MSVR/AVR
1967 10.7 8.9 1998 11.0 9.01970 9.7 8.6 1999 11.1 9.11975 8.1 7.4 2000 11.1 9.21980 9.2 7.7 2001 10.1 8.71985 9.1 7.7 2002 9.3 8.41990 8.5 7.3 2003‡ 9.6 8.51991 9.3 7.9 2004‡ 9.8 8.61992 9.6 8.1 2005‡ 9.7 8.51993 10.0 8.4 2006‡ 10.0 8.61994 10.2 8.6 2007‡ 10.3 8.9 1995 10.7 9.0 2008‡ 8.7 8.11996 11.9 10.0 2009‡ 9.7 9.11997 10.6 8.7
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Capital ratio is equal to capital plus surplus plus the asset valuation reserve (AVR), or mandatory securities valuation reserve (MSVR) prior to 1992, divided by general account assets. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.
4The gross income of life insurance companies comes
from two main sources: premiums paid by policyholders
and earnings on investments. In 2009, total income
of all U.S. life insurers decreased 17 percent to $781
billion (Table 4.1). Insurance premiums and annuity
considerations contributed 67 percent of total income.
Investment earnings contributed 27 percent. The
remainder of gross income came from amortization of
interest maintenance reserve, commissions and expense
allowance on reinsurance ceded, and miscellaneous
income.
Under statutory accounting rules, net gain from
(insurance) operations is calculated prior to net income.
Net gain from operations equals gross income minus
operating expenditures, policyholder dividends, and
federal income taxes. Capital gains, net of tax, are then
added to net gain from operations to calculate (after
tax) net income.
Premium income
Premium receipts—derived from sales of life insurance,
health insurance, and annuities—increased 18.4 percent
to $522 billion in 2009 (Table 4.2).
The mix of premiums from life insurance and annuity
considerations has changed markedly over time. Prior to
1986, premium receipts from life policies were greater
than annuity considerations, but starting in 1986, annuity
premiums have exceeded life insurance premiums
(Table 4.10). By 2009, life policies accounted for roughly
one-quarter of premium receipts (24%), while annuity
considerations contributed nearly half (44%) (Figure 4.1).
Premiums for life insurance policies totaled $125 billion
in 2009, a 15 percent decrease from the previous year
(Table 4.2). Individual policy premiums accounted for
the largest share at $99 billion, or 79 percent. Most
were renewals, representing $68 billion, or 69 percent,
of individual premiums (Table 4.3). Group insurance
was the second-largest contributor to life insurance
premiums at $25 billion, or 20 percent of the total. Again,
renewals constituted the largest portion at $24 billion, or
96 percent, of all group premiums. Credit life provided
$842 million of all life insurance premiums (Table 4.2).
Americans spent 0.9 percent of total disposable (after-
tax) personal income on individual life insurance in
2009 (Table 4.5).
Annuity considerations decreased 29 percent in 2009 to
$232 billion (Table 4.2). Individual annuities provided
$129 billion in premium receipts, decreasing 38 percent
from 2008. Of individual annuity considerations, single
annuity considerations constitute the largest share of
this category at $94 billion, while group considerations
counted renewals as the largest contributor with $57
billion (Table 4.4). Individual annuity considerations
amounted to 1.2 percent of disposable personal income
in 2009 (Table 4.5).
Premiums for accident and health insurance increased
1 percent to $166 billion in 2009 (Table 4.1) with group
premiums being the largest portion at $90 billion, down
5 percent from 2008 (Table 4.2). Individual accident and
health premiums increased to $75 billion, with the largest
share at $33 billion coming from guaranteed renewable
contracts (Table 4.6).
income
36 American Council of Life Insurers
investment income and rate of return
Net investment income of life insurance companies
amounted to $198 billion in 2009 (Table 4.7). The largest
source of investment income was from bonds at $142
billion, followed by common stock ($31 billion) and
mortgage loans ($21 billion). Gross investment income
decreased 19 percent from 2008. Investment expenses,
taxes, and deductions totaling $12 billion were down
12 percent from the previous year.
As a way of tracking investment performance, life
insurers routinely calculate their net rate of return on
invested assets. The net rate of return on invested assets
is determined by dividing net investment income by the
two-year average of the net invested assets. The gross
rate of return on total fixed income assets is calculated
by dividing the gross investment income on bonds by
the average net investment in bonds.
In 2009, life insurers’ net rate of return on total assets
was 4.60 percent, down from 5.70 percent a year earlier
(Table 4.8). This net rate is an annual average based
on aggregates of all U.S. life insurance companies after
investment expenses, but before federal income taxes.
Excluding separate accounts, the portfolio net rate of
return on general account assets was 5.25 percent in
2009, down from 5.63 percent in 2008.
The gross rate of return on fixed-income assets measures
the return on bonds, preferred stocks, and mortgages.
It does not account for depreciation or investment
expenses and excludes equity investments (other than
preferred stocks), avoiding the uneven treatment of gains
in the numerator and denominator of net rate data.
Gross rate data apply to fixed-income assets of both
general and separate accounts. The industry’s gross rate
on total fixed-income assets decreased to 5.91 percent
in 2009 from 5.97 percent a year earlier.
net Gain from oPerations
Statutory accounting calculates net gain from (insurance)
operations as gross income minus operating expenses,
policyholder dividends, and federal income taxes
(not including tax on capital gains, since capital gains
are not included in gain from operations). Net gain
from operations after federal income taxes increased
significantly in 2009 to $52 billion (Table 4.9). Net
gains can be calculated separately for each major line
of business. Net gains from annuities were $27 billion
compared with $22 billion in net losses a year ago.
The net gain from life insurance increased 2 percent to
$10 billion.
37Income
Table 4.1income of Life insurers
Millions Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Netpremiumsandconsiderations Life insurance premiums $120,274 $147,182 $124,564 0.4 -15.4 Annuity considerations1 270,212 328,135 231,580 -1.5 -29.4 Health insurance premiums 100,049 165,034 166,164 5.2 0.7Total 490,535 640,350 522,308 0.6 -18.4
Investmentincome 186,563 260,123 211,650 1.3 -18.6
Otherincome2 49,830 40,166 47,468 -0.5 18.2
Aggregate total 726,928 940,638 781,426 0.7 -16.9
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Beginning in 2001, excludes certain deposit-type funds from income due to codification. Also excludes resources for supplementary contracts without life contingencies and annuities certain, lottery payments, structured settlements, and income payment options.2Includes commissions and expense allowance on reinsurance ceded. For 2005-2009, includes amortization of interest maintenance reserve.
Table 4.2Premium receipts of Life insurers
Millions Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsurancepremiums Individual $93,354 $117,399 $98,579 0.5 -16.0 Group 24,946 28,644 25,143 0.1 -12.2 Credit 1,974 1,138 842 -8.2 -26.0Total 120,274 147,182 124,564 0.4 -15.4
Annuityconsiderations1
Individual 115,621 208,965 128,853 1.1 -38.3 Group 154,591 119,169 102,727 -4.0 -13.8
Total 270,212 328,135 231,580 -1.5 -29.4
Healthinsurancepremiums Individual 26,954 69,644 75,404 10.8 8.3 Group 71,370 94,454 90,005 2.3 -4.7 Credit 1,724 935 756 -7.9 -19.2Total 100,048 165,034 166,164 5.2 0.7
Aggregate total 490,534 640,350 522,308 0.6 -18.4
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Beginning in 2001, excludes certain deposit-type funds from income due to codification. Also excludes resources for supplementary contracts without life contingencies and annuities certain, lottery payments, structured settlements, and income payment options.
38 American Council of Life Insurers
Table 4.3individual and Group Life insurance net Premium receipts, 2009 (millions)
Percent Percent Percent Individual distribution Group distribution Total distribution
First-year $12,395 12.6 -$19 -0.1 $12,376 10.0 Single1 17,930 18.2 919 3.7 18,850 15.2 Renewal 68,253 69.2 24,243 96.4 92,496 74.8
Aggregate total 98,579 100.0 25,143 100.0 123,722 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Credit life premiums on loans of 10 years’ or less duration are excluded. Data represent U.S. life insurers and fraternal benefit societies.1Includes dividend additions, excess premiums beyond planned periodic premiums, and single-premium riders.
Figure 4.1distribution of Life insurers’ net Premium receipts, 2009
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Annuity considerations44%
Life insurance premiums32%
Health insurance premiums24%
Distribution of Life Insurers’ Net Premium Receipts, 2009Figure 4.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
39Income
Table 4.4individual and Group annuity considerations, 2009 (millions)
Percent Percent Percent Individual1 distribution Group1 distribution Total distribution
First-year $93,919 72.9 $24,027 23.4 $117,947 50.9
Single2 19,331 15.0 21,276 20.7 40,607 17.5
Renewal 15,603 12.1 57,424 55.9 73,026 31.5
Total 128,853 100.0 102,727 100.0 231,580 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective in 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and fraternal benefit societies.1Beginning in 2001, excludes certain deposit-type funds from income due to codification, and includes supplementary contracts with life contingencies. Also excludes reserves for supplementary contracts without life contingencies and annuities certain, lottery payouts, structured settlements, and income payout options.2Includes supplementary contracts with life contingencies for individual annuity considerations.
Table 4.5individual Life Premiums and annuity considerations as Percentage of disposable Personal income
Percent
1999 2008 2009
Individual
Life premiums 1.37 1.09 0.90
Annuity considerations1 1.70 1.93 1.18
Total 3.07 3.02 2.08
Sources: U.S. Department of Commerce; ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective in 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and fraternal benefit societies.1Beginning in 2001, excludes certain deposit-type funds from income due to codification, and includes supplementary contracts with life contingencies. Also excludes reserves for supplementary contracts without life contingencies and annuities certain, lottery payouts, structured settlements, and income payout options.
Table 4.6accident and Health insurance net Premium receipts
Millions Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Group $71,370 $89,558 $90,005 2.3 0.5
Credit 1,724 756 756 -7.9 0.0
Individual
Collectively renewable 446 48 34 -22.6 -29.2 Noncancelable 4,422 6,740 6,787 4.4 0.7 Guaranteed renewable 18,044 33,322 33,247 6.3 -0.2 Nonrenewable 1,313 5,238 5,641 15.7 7.7
Other accident 603 8,423 10,872 33.5 29.1 All other 2,127 18,162 18,823 24.4 3.6
Total 26,954 71,934 75,404 10.8 4.8
Aggregate total 100,048 162,249 166,164 5.2 2.4
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Premium receipts are net of reinsurance. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
40 American Council of Life Insurers
Table 4.7net investment income
Millions Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Grossinvestmentincome Bonds $108,426 $141,050 $141,860 2.7 0.6 Preferred stock 1,047 4,159 790 -2.8 -81.0 Common stock 31,011 68,483 31,251 0.1 -54.4 Mortgage loans 18,750 21,547 20,700 1.0 -3.9 Real estate 7,683 4,647 4,200 -5.9 -9.6 Contract loans 7,723 7,805 8,136 0.5 4.2 Cash/Short-term investments 5,091 4,456 914 -15.8 -79.5 Other invested assets 7,820 9,149 6,095 -2.5 -33.4 Derivative instruments 376 -2,258 -2,640 NC 16.9 Other write-ins 1,422 1,083 344 -13.2 -68.3
Total 189,349 260,123 211,650 1.1 -18.6
Expenses,taxes,anddeductions 12,548 13,839 12,143 -0.3 -12.3
Netinvestmentincome 176,801 246,284 199,506 1.2 -19.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
Table 4.8rates of return on invested assets of Life insurers
Percent
1999 2008 2009
NetrateTotal assets 6.71 5.70 4.60General account only 7.49 5.63 5.25
GrossrateTotal fixed-income assets 7.93 5.97 5.91
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
41Income
Table 4.9net Gain from operations after federal income taxes
Millions Averageannualpercentchange
1999 2008 2009 1999/2009 2008/2009
Lifeinsurance Individual $5,876 $7,428 $7,259 2.1 -2.3
Group 898 1,726 2,196 9.4 27.2 Credit 188 245 163 -1.4 -33.7
Total 6,962 9,399 9,618 3.3 2.3
Annuities1
Individual 4,317 -22,093 15,607 NC NC Group 3,711 153 11,716 12.2 7557.3
Total 8,027 -21,940 27,323 NC NC
Accidentandhealth Individual 626 3,836 5,057 23.2 31.8 Group -71 5,952 4,615 NC -22.5 Credit 304 257 223 -3.1 -13.1
Total 859 10,045 9,895 27.7 -1.5
Other2 2,906 5,227 5,115 5.8 -2.2
Aggregate total 18,755 2,731 51,951 10.7 1802.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Net gain is calculated after dividends to policyholders and federal income taxes are deducted and before realized capital gains or (losses) are added. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Beginning in 2001, excludes certain deposit-type funds from income due to codification, and includes supplementary contracts with life contingencies. Also excludes reserves for supplementary contracts without life contingencies and annuities certain, lottery payouts, structured settlements, and income payout options.2Includes lines of business other than life (e.g. workers compensation, aviation insurance, etc.).
42 American Council of Life Insurers
Table 4.10income of Life insurers, by Year (millions)
Netpremiumreceipts
Life Health Total insurance Annuity insurance premium Investment OtherYear premiums considerations premiums receipts income1 income2 Totalincome
1911 $626 $4 — $630 $182 $24 $8361915 776 6 — 782 241 20 1,0431920 1,374 7 — 1,381 341 42 1,7641925 2,340 38 — 2,378 551 89 3,0181930 3,416 101 — 3,517 891 186 4,5941935 3,182 491 — 3,673 1,013 386 5,0721940 3,501 386 — 3,887 1,231 540 5,6581945 4,589 570 — 5,159 1,445 1,070 7,6741950 6,249 939 $1,001 8,189 2,075 1,073 11,3371955 8,903 1,288 2,355 12,546 2,801 1,197 16,5441960 11,998 1,341 4,026 17,365 4,304 1,338 23,0071965 16,083 2,260 6,261 24,604 6,778 1,785 33,1671970 21,679 3,721 11,367 36,767 10,144 2,143 49,0541975 29,336 10,165 19,074 58,575 16,488 2,959 78,0221980 40,829 22,429 29,366 92,624 33,928 4,336 130,8881985 60,127 53,899 41,837 155,863 67,952 10,212 234,0271986 66,213 83,712* 44,153 194,078 75,435 12,744 282,2571987 76,737 88,677 47,549 212,963 82,875 18,460 314,2981988 73,531 103,278 52,306 229,115 92,042 16,983 338,1401989 73,290 114,997 56,079 244,366 103,965 18,987 367,3181990 76,692 129,064 58,254 264,010 111,853 26,337 402,2001991 79,301 123,590 60,900 263,791 118,984 28,247 411,0221992 83,868 132,645 65,545 282,058 121,389 23,469 426,9161993 94,448 156,445 68,658 319,551 124,205 22,594 466,3501994 98,948 153,019 86,184 338,151 125,999 28,478 492,6281995 102,766 158,389 90,038 351,193 143,967 32,894 528,0541996 107,598 178,416 92,183 378,197 152,700 30,190 561,0871997 115,039 197,529 92,737 405,305 170,713 34,628 610,6461998 119,897 229,493 94,881 444,271 176,801 42,311 663,3831999 120,274 270,212 100,049 490,535 186,563 49,830 726,9282000 130,616 306,693 105,619 542,928 220,862 47,679 811,4692001 125,314 251,255^ 103,413 479,982 203,399 41,068 724,4482002 134,483 269,296^ 108,703 512,482 180,855 40,676 734,0132003‡ 127,320 268,558^ 115,827 511,705 179,744 35,558 727,0072004‡ 139,691 276,677^ 125,752 542,120 186,827 27,863 756,8102005‡ 142,261 277,117^ 118,267 537,645 206,859 34,521 779,0242006‡ 149,223 302,727^ 141,198 593,149 239,669 50,779 883,5972007‡ 142,661 314,225^ 151,462 608,348 267,394 74,624 950,3662008‡ 147,182 328,135^ 165,034 640,350 260,123 40,166 940,6382009‡ 124,564 231,580^ 166,164 522,308 211,650 47,468 781,426
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in footnotes. Prior to 1947, the business of health insurance departments of life insurers was not included in this series. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.*Unusually large increase due to NAIC-mandated change in reporting method for group annuity considerations.^Excludes certain deposit-type funds from income due to codification.‡Includes fraternal benefit societies.1Beginning in 2000 represents gross investment income. Prior to 2000, figures are net of investment expenses.2Beginning in 1975, includes commissions and expense allowance on reinsurance ceded. Beginning in 1992, includes amortization of the interest maintenance reserve.
43Income
Table 4.11individual Life insurance Premium receipts, by Year (millions)
Year First-year Single1 Renewal Total
1970 $1,869 $1,114 $14,033 $17,0161975 2,705 1,505 18,125 22,3351980 4,520 2,448 23,818 30,7861981 5,927 2,486 27,283 35,6961982 5,948 3,232 30,675 39,8551983 6,910 4,221 27,913 39,0441984 8,794 4,735 26,204 39,7331985 10,858 6,941 29,202 47,0011986 11,524 9,901 30,980 52,4051987 12,484 15,610 34,584 62,6781988 10,670 11,893 36,150 58,7131989 10,658 8,800 38,716 58,1741990 11,249 8,261 41,055 60,5651991 11,398 8,445 43,521 63,3641992 11,141 9,389 45,739 66,2691993 13,314 11,447 50,570 75,3311994 14,081 8,820 53,153 76,0541995 12,081 9,945 56,453 78,4791996 12,041 10,799 60,001 82,8411997 14,592 11,999 60,846 87,4371998 17,353 15,802 60,396 93,5501999 16,784 13,540 63,029 93,3542000 17,881 16,565 68,047 102,4932001 17,849 19,145 58,432 95,4262002 15,934 21,768 68,454 106,1562003‡ 14,650 20,463 62,795 97,9072004‡ 16,098 23,550 71,207 110,8552005‡ 16,680 25,363 69,873 111,9152006‡ 14,578 29,774 69,612 113,9642007‡ 14,145 40,291 49,044 103,4792008‡ 14,460 34,068 68,871 117,3992009‡ 12,395 17,930 68,253 98,579
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. 1969-72 data include credit life insurance premiums. Beginning with 1973, credit life premiums on loans of 10 years’ or less in duration are excluded. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.1Includes dividend additions, excess premiums beyond planned periodic premiums, and single-premium riders.
44 American Council of Life Insurers
Table 4.12individual annuity considerations, by Year (millions)
Deposit-typeYear First-year Single Renewal funds1 Total
1970 $183 $230 $547 — $9601975 728 808 1,128 — 2,6641980 839 3,033 2,424 NA 6,2961981 1,240 6,100 2,950 NA 10,2901982 2,863 8,769 3,564 NA 15,1961983 2,211 7,842 3,950 NA 14,0031984 2,385 8,673 4,648 NA 15,7061985 3,390 11,095 6,406 NA 20,8911986 4,683 13,281 8,153 NA 26,1171987 6,238 18,578 8,948 NA 33,7641988 7,875 28,053 7,856 NA 43,7841989 5,597 20,970 6,437 $16,403 49,4071990 6,080 22,777 6,992 17,817 53,6651991 5,854 21,930 6,732 17,154 51,6701992 6,775 21,964 7,378 25,232 61,3481993 8,793 23,393 6,513 38,288 76,9871994 8,263 22,901 6,448 43,221 80,8321995 7,913 22,898 8,725 37,834 77,3701996 9,727 19,802 6,461 48,077 84,0671997 10,806 22,441 6,781 50,145 90,1741998 11,092 17,129 7,179 60,047 95,4461999 14,599 19,470 6,784 74,767 115,6212000 15,050 27,022 7,480 90,099 139,6512001* 51,576 63,078 27,002 NA 141,6562002* 64,731 75,412 28,291 NA 168,4342003*‡ 61,439 75,410 24,855 NA 161,7042004*‡ 60,568 86,383 25,188 NA 172,1402005*‡ 66,771 78,354 21,907 NA 167,0322006*‡ 81,923 77,193 27,967 NA 187,0832007*‡ 92,395 71,268 28,841 NA 192,5032008*‡ 89,758 94,111 25,097 NA 208,9652009*‡ 93,919 19,331 15,603 NA 128,853
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.*Certain deposit-type funds are excluded from income under codification, making data after 2000 incomparable.‡Includes fraternal benefit societies.1First included in annual statements for 1978 and divided into first-year, single, and renewal annuity considerations through 1988.
45Income
Table 4.13rates of return on invested assets of Life insurers, by Year (percent)
Netrate Grossrate
Year Totalassets Generalaccountonly Totalfixedincomeassets
1920 4.83 NA NA1925 5.11 NA NA1930 5.05 NA NA1935 3.70 NA NA1940 3.45 NA NA1945 3.11 NA NA1950 3.13 NA NA1955 3.51 NA NA1960 4.11 NA NA1965 4.61 4.61 NA1970 5.30 5.34 5.851975 6.36 6.44 7.371980 8.02 8.06 9.261981 8.57 8.53 9.871982 8.91 8.87 10.351983 8.96 9.08 10.631984 9.45 9.65 11.351985 9.63 9.87 12.231986 9.35 9.64 11.141987 9.10 9.39 10.621988 9.03 9.41 10.511989 9.10 9.47 10.581990 8.89 9.31 10.341991 8.63 9.09 10.051992 8.08 8.58 9.441993 7.52 8.04 8.711994 7.14 7.63 8.221995 7.41 7.90 8.431996 7.25 7.75 8.171997 7.35 7.86 8.081998 6.95 7.58 8.001999 6.71 7.49 7.932000 7.05 7.40 7.912001 6.31 7.13 7.622002 5.38 6.64 7.132003‡ 5.03 6.17 6.442004‡ 4.80 5.93 6.032005‡ 4.90 5.88 5.962006‡ 5.35 5.95 5.992007‡ 5.71 6.01 6.102008‡ 5.70 5.63 6.012009‡ 4.60 5.25 5.91
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Before 1940, some federal income taxes were deducted from net investment income; beginning with 1940, rates are calculated before deducting any federal income taxes. Beginning in 1994, rates include amortization of the interest maintenance reserve. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡ Includes fraternal benefit societies.NA: Not available.
46 American Council of Life Insurers
5Life insurance company expenditures include benefit
payments and other contract payments, operating
expenses, taxes, additions to reserves, and investment
expenses. Contract payments accounted for 74 percent
of expenditures at $507 billion in 2009 (Table 5.1, Figure
5.1). Additions to reserves were $50 billion at 7 percent
in 2009.
Operating expenses comprised 15 percent of 2009 total
expenditures, taxes claimed 2 percent and investment
expenses claimed 2 percent. Each expenditure category
is detailed in this chapter, with the exception of reserves,
which are discussed in Chapter 3.
ContraCt Payments
From Life Insurance Policies
Several factors affect the pattern of life insurance benefit
payments. Primary among them are changes in the
death rate of policyholders and the growth in group life
insurance and other term insurance policies that do not
incorporate a cash value.
These payments have increased steadily for many years,
reflecting greater use of life insurance not only to provide
funds for the family whose breadwinner dies, but also for
family financial needs during the policyholder’s lifetime.
Nationally, increasing life insurance ownership has been
the main reason for the almost uninterrupted rise in
life insurance death payments over the years, despite
a general decline in death rates among policyholders.
To Beneficiaries
During 2009, life insurers paid $59 billion to beneficiaries
of policyholders who died, a slight decrease from 2008
(Table 5.2). Of this total, individual life insurance policies
accounted for nearly two-thirds and provided $38 billion
(64%). Group life insurance payments to beneficiaries
ranked second at $21 billion, or 35 percent of total death
payments. Benefits paid under short-term individual and
group credit life insurance policies (on loans of 10 years’
or less duration) totaled $527 million in 2009.
To Policyholders
Although the basic purpose of life insurance is to protect
against the economic risks of death, it can also generate
value for the individual policyholder. Cash surrender
values paid on life insurance policies terminated
voluntarily during 2009 declined by 18 percent to $48
billion from a year earlier (Table 5.2).
Policyholder dividends represent the return of part of the
payments that policyholders made on policies sold on
a participating basis, and reflect the portion not needed
by the company after payment of claims, additions
to reserves, and administrative expenses. Dividends
accounted for $14 billion, or 11 percent of payments
from life insurance policies in 2009.
Endowment insurance guarantees that the policy’s
face amount will be paid by the insurance company
regardless of whether the insured dies during the policy’s
term, as long as premiums are paid as required. These
policies specify a maturity date. Matured endowment
payments totaled $546 million in 2009.
eXPenDItUres
48 American Council of Life Insurers
Other payments, including disability payments and
retained assets under life insurance policies, totaled $551
million in 2009.
From Annuity Contracts
Annuity benefit payments decreased by 4 percent to $67
billion in 2009 from 2008 (Table 5.3). Beginning in 2001,
payments and withdrawals from deposit-type contracts
are no longer reported as expenditures but directly as a
deduction from reserves.
Sixty percent of the annuity benefit payments, or $40
billion, was paid to individual annuity owners, while $25
billion, or 37 percent, was paid to group annuity owners.
The remainder was paid under supplementary contracts
with life contingencies—an agreement between an
insurer and a life insurance policyholder or beneficiary
in which the beneficiary chooses to receive the policy’s
proceeds over a lifetime rather than in a lump sum.
Life insurers paid $183 billion on voluntarily terminated
annuities in 2009, $3 billion in dividends to annuity
owners, and small amounts of death benefits, disability
benefits, and matured endowments.
From Health Insurance Policies
Health insurance has become a notable aspect of U.S.
life insurers’ services. Life insurance companies paid
$122 billion in health insurance benefits to Americans
in 2009—$71 billion under group contracts and $51
billion under individual policies (Table 5.4). Life insurers’
total health insurance benefit payments to Americans
increased 3 percent from 2008.
These statistics do not include disability payments under
life insurance policies, health insurance and accidental
death and dismemberment payments by casualty and
other health insurance companies, or administrative-
service-only arrangements.
oPeratIng eXPenses
Operating expenses of life insurance companies include
commissions to agents and home- and field-office
expenses. In 2009, agent commissions comprised 7
percent of expenditures at $50 billion (Table 5.1). Home-
and field-office expenses were $56 billion, or 8 percent
of total expenditures.
Of total office expenses, $36 billion, or 64 percent, was
in salaries and payments to employee and agent benefit
plans (Table 5.5). In 2009, life insurers also spent $7
billion on office equipment and supplies, $3 billion on
office rent, $3 billion on fees associated with policy
issuance and claim settlement, $3 billion on advertising,
and $1 billion on travel.
taXes
Life insurance companies incurred $15 billion in taxes
to federal, state, and local governments in 2009 (Table
5.6). The financial market downturn in 2008 created
huge capital losses and tax credits for life insurers,
resulting in more than $650 million in federal income tax
credit. Other types of taxes changed slightly from their
2008 levels. Significant year-to-year variation in federal
income taxes is largely due to changes in capital gain/
loss obligations.
Another large tax obligation of life insurers’ is payment
of taxes on premiums that companies collect in each
state. In 2009, U.S. life insurers incurred $4 billion in
state taxes on premiums collected from life, health, and
annuity business.
As employers of over one-third of a million home-office
personnel, U.S. life insurers also incurred $2 billion
in Social Security taxes in 2009. This figure does not
include Social Security taxes paid by employees or self-
employed agents.
Miscellaneous taxes, licenses, and fees accounted for
more than $1 billion in 2009. These taxes do not include
amounts associated with investment management.
49Expenditures
Investment eXPenses
Expenses, fees, and taxes associated with investment
management totaled $12 billion in 2009 (Table 5.7).
Depreciation on invested assets is the largest category
at about $2.6 billion followed by interest at $2.1 billion.
Table 5.1expenditures of Life Insurers
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Contract payments Life insurance $90,333 $134,279 $122,353 3.1 -8.9 Annuities1 266,556 310,821 252,536 -0.5 -18.8
Health insurance 75,340 118,922 122,018 4.9 2.6 Other payments2 8,878 13,764 10,212 1.4 -25.8
Total 441,107 577,787 507,119 1.4 -12.2
Additions to policy reserve funds3 60,428 239,847 50,347 -1.8 -79.0
Operating expenses Commissions to agents 38,883 52,525 49,574 2.5 -5.6 Home- and field-office expenses 43,914 55,544 55,776 2.4 0.4
Total 82,798 108,069 105,350 2.4 -2.5
Taxes4 15,894 6,832 14,763 -0.7 116.1
Investment expenses5 11,146 13,839 12,143 0.9 -12.3
Aggregate total 611,373 946,374 689,721 1.2 -27.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Beginning in 2001, excludes payments under deposit-type contracts (such payments are shown in Table 3.3). Does not include payments from supplementary contracts without life contingencies and annuities certain, lottery payouts, structured settlements, and income payout options.2Includes group conversions and interest on policy or contract funds. Prior to 2001, also includes payments on dividend accumulations and supplementary contracts without life contingencies.3Beginning in 2001, excludes addition to reserves for deposit-type contracts.4Includes foreign and U.S. federal income taxes, including taxes on capital gains; excludes investment taxes. Data for 1999 do not include foreign income taxes.5Includes investment-related taxes and fees.
50 American Council of Life Insurers
Table 5.2Payments From Life Insurance Policies
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Payments to beneficiaries Individual $25,274 $37,893 $38,306 4.2 1.1 Group 15,260 21,525 20,638 3.1 -4.1
Credit 829 531 527 -4.4 -0.7Total 41,363 59,949 59,470 3.7 -0.8
Surrender values Individual 30,907 57,334 41,118 2.9 -28.3 Group 1,927 1,295 7,023 13.8 442.4Total 32,833 58,629 48,141 3.9 -17.9
Policyholder dividends 15,036 14,568 13,644 -1.0 -6.3
Matured endowments 488 584 546 1.1 -6.6
Other payments1 612 550 551 -1.0 0.3
Aggregate total 90,333 134,279 122,353 3.1 -8.9
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Includes disability benefits and retained assets.
Figure 5.1Distribution of Life Insurers’ expenditures, 2009
Benefit payments74%
Additions to reserves7%
Taxes2%
Investment expenses2%
Operating expenses15%
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
Distribution of Life Insurers’ Expenditures, 2009Figure 5.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
51Expenditures
Table 5.3Payments From annuity Contracts
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Annuity benefits1
Individual1 $27,594 $41,194 $40,263 3.9 -2.3 Group1 34,891 26,674 25,036 -3.3 -6.1
Supplementary contracts with life contingencies 1,601 1,780 1,770 1.0 -0.6
Total 64,086 69,648 67,068 0.5 -3.7
Surrender values2
Individual 73,148 139,091 103,058 3.5 -25.9 Group 125,163 97,564 79,647 -4.4 -18.4
Total 198,311 236,654 182,705 -0.8 -22.8
Policyholder dividends 4,112 4,485 2,519 -4.8 -43.8
Matured endowments 39 29 26 -3.9 -9.1
Other payments3 8 5 217 39.4 3972.4
Aggregate total 266,556 310,821 252,536 -0.5 -18.8
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Beginning in 2001, excludes payments under deposit-type contracts (such payments are shown in Table 3.3). Does not include payments from annuities certain and supplementary contracts without life contingencies, lottery payouts, structured settlements, and income payout options.2Beginning in 2001, excludes surrender benefits and fund withdrawals from deposit-type contracts.3Includes death benefits, disability benefits, and retained assets.
Table 5.4Payments From Health Insurance Policies
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Group $58,203 $71,376 $71,077 2.0 -0.4
Individual 16,261 47,089 50,501 12.0 7.2
Credit 876 457 440 -6.6 -3.6
Total 75,340 118,922 122,018 4.9 2.6
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
52 American Council of Life Insurers
Table 5.5Life Insurer Home- and Field-office expenses
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Rental $2,566 $3,078 $3,083 1.9 0.2
Employment
Salaries 20,474 27,656 28,469 3.4 2.9 Welfare contributions and payments 3,448 5,728 7,031 7.4 22.7Total 23,922 33,385 35,500 4.0 6.3Fees associated with policy issuance/claim settlement 2,843 3,271 3,213 1.2 -1.8
Travel 1,050 1,394 1,050 0.0 -24.6
Advertising 1,732 3,222 2,702 4.5 -16.1
Office equipment/supplies 6,560 7,911 7,094 0.8 -10.3
Miscellaneous 5,241 3,283 3,134 -5.0 -4.5
Aggregate total 43,914 55,544 55,776 2.4 0.4
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Figures exclude investment expenses. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
Table 5.6taxes, Licenses, and Fees
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Income taxes1 $9,969 ($657) $7,416 -2.9 NC
Social Security taxes 1,548 1,894 1,828 1.7 -3.5
State taxes on premiums 3,279 4,255 4,065 2.2 -4.5
Real estate taxes 25 27 31 2.2 15.9
Miscellaneous taxes, licenses, and fees 1,073 1,312 1,422 2.9 8.3
Total 15,894 6,832 14,763 -0.7 116.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Figures exclude investment taxes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NC: Not calculated. 1Includes foreign and U.S. federal income taxes, including taxes on capital gains; excludes non-income, state, and investment taxes. Data for 1999 do not include foreign income taxes.
53Expenditures
Table 5.7Investment expenses of Life Insurers
Millions Average annual percent change
1999 2008 2009 1999/2009 2008/2009
Rental $139 $255 $241 5.7 -5.6
Employment
Salaries 1,339 1,517 1,549 1.5 2.1 Welfare contributions/payments 179 260 253 3.5 -2.6
Total 1,518 1,777 1,802 1.7 1.4
Real estate expenses 2,362 1,577 1,544 -4.2 -2.1
Interest 1,680 2,225 2,063 2.1 -7.3
Depreciation on invested assets 1,051 2,110 2,558 9.3 21.2
Investment taxes and fees1
Real estate 776 595 456 -5.2 -23.5 Other 140 109 96 -3.7 -12.3
Total 916 704 551 -5.0 -21.7
Other 3,481 5,191 3,385 -0.3 -34.8
Aggregate total 11,146 13,839 12,143 0.9 -12.3
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Excludes federal income taxes and taxes on capital gains.
54 American Council of Life Insurers
Table 5.8Payments Under Life Insurance Policies and annuity Contracts, by year (millions)
Payments Policy- Matured to bene- Life Annuity holder Annuity endow- Other Year ficiaries policies contracts2 dividends payments2 ments payments3 Total
1940 $995 $652 NA $468 $176 $269 $104 $2,6641945 1,280 211 NA 466 216 407 88 2,6681950 1,590 592 NA 627 327 495 100 3,7311955 2,241 896 NA 1,021 501 614 110 5,3831960 3,346 1,633 NA 1,512 830 673 124 8,1181965 4,831 1,932 NA 2,259 1,300 931 163 11,4161970 7,017 2,887 NA 3,214 2,120 978 233 16,4491975 9,192 3,763 NA 4,544 3,665 946 426 22,5361980 12,884 6,678 NA 6,785 10,195 908 592 38,0421981 14,154 7,961 NA 7,838 12,021 883 627 43,4841982 15,066 10,779 NA 7,922 12,814 839 574 47,9941983 15,660 12,605 NA 8,641 13,564 824 566 51,8601984 16,752 14,731 NA 9,700 17,912 771 566 60,4321985 18,226 15,589 NA 10,121 21,259 779 536 66,5101986 19,479 14,741 NA 10,122 22,657 766 540 68,3051987 20,530 14,864 NA 10,466 24,316 752 504 71,4321988 21,660 14,456 NA 11,046 25,665 751 513 74,0911989 23,261 14,859 NA 11,417 29,383 727 554 80,2011990 24,567 18,022 NA 11,953 32,575 700 568 88,3851991 25,407 16,282 NA 12,066 36,615 668 547 91,5851992 27,235 16,814 NA 12,203 37,550 649 592 95,0431993 28,819 16,904 NA 12,714 40,325 598 615 99,9751994 32,583 18,014 $92,779 15,915 40,412 647 459 200,8091995 34,545 19,501 105,449 17,816 48,457 1,007 860 227,6351996 36,257 24,454 115,747 18,064 51,069 741 614 246,9461997 37,488 24,016 140,842 17,981 55,080 563 608 276,5781998 40,101 26,816 154,463 18,865 60,410 572 607 301,8341999 41,363 32,833 198,311 19,149 62,485 528 620 355,2882000 44,143 27,173 213,989 20,001 68,668 604 605 375,1812001 46,512 30,653 151,315 19,993 55,197 549 648 304,8672002 48,166 32,909 142,948 21,033 54,950 621 649 301,2762003‡ 51,661 35,943 140,261 20,761 57,110 596 650 306,9822004‡ 51,576 35,485 162,876 18,981 61,162 595 866 331,5412005‡ 52,996 39,157 190,329 17,919 63,935 640 695 365,6722006‡ 55,694 38,463 237,813 18,429 71,087 612 566 422,6642007‡ 57,957 47,670 262,343 19,519 72,332 623 564 461,0082008‡ 59,949 58,629 236,654 19,053 69,648 614 555 445,1012009‡ 59,470 48,141 182,705 16,163 67,068 573 768 374,888
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in footnotes. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.‡Includes fraternal benefit societies.1Beginning in 1994, includes annuity withdrawals of funds. An amount comparable to prior years is not available.2Beginning in 2001, excludes payments under deposit-type contracts (see Table 3.3).3Includes some disability benefits and retained assets.
Surrender values1
55Expenditures
Table 5.9Payments to Life Insurance Beneficiaries, by year
Policies in thousands/Amounts in millions
Individual Group Credit1 Total
Year Policies Amount Policies Amount Policies Amount Policies Amount
1940 974 $891 50 $104 — — 1,024 $9951945 1,226 1,109 92 171 — — 1,318 1,2801950 1,246 1,307 133 283 — — 1,379 1,5901955 1,418 1,650 243 591 — — 1,661 2,2411960 1,644 2,231 394 1,115 — — 2,038 3,3461965 1,866 3,007 636 1,824 — — 2,502 4,8311970 1,974 3,990 767 3,027 — — 2,741 7,0171975 1,998 4,901 591 3,807 337 $484 2,926 9,1921980 2,045 6,587 637 5,671 285 626 2,967 12,8841981 2,016 7,117 668 6,374 324 663 3,008 14,1541982 1,997 7,457 645 6,953 331 656 2,973 15,0661983 2,004 7,776 663 7,256 252 628 2,919 15,6601984 2,158 8,457 675 7,655 248 640 3,081 16,7521985 2,013 9,264 683 8,275 262 687 2,958 18,2261986 2,039 10,030 686 8,675 246 774 2,971 19,4791987 1,981 10,593 690 9,073 262 864 2,933 20,5301988 2,044 11,416 695 9,346 276 898 3,015 21,6601989 1,988 12,332 763 10,029 240 900 2,991 23,2611990 1,965 13,439 728 10,281 238 847 2,931 24,5671991 1,984 13,949 674 10,582 219 876 2,877 25,4071992 1,926 15,287 643 11,022 186 926 2,755 27,2351993 1,945 16,584 668 11,572 136 663 2,749 28,8191994 2,388 18,792 870 12,914 240 877 2,974 32,5831995 2,405 20,106 767 13,527 224 912 3,396 34,5451996 2,401 21,351 867 14,016 273 890 3,541 36,2571997 2,480 22,695 843 13,898 274 895 3,597 37,4881998 2,435 24,838 819 14,425 391 838 3,644 40,1011999 2,715 25,274 875 15,260 380 829 3,970 41,3632000 2,561 27,267 877 16,055 383 821 3,821 44,1432001 2,688* 28,346 935 17,393 313 773 3,936 46,5122002 2,632 30,117 942 17,308 341 741 3,915 48,1662003‡ 2,673 32,901 1,107 18,064 293 695 4,073 51,6612004‡ 2,786 32,222 826 18,708 241 646 3,853 51,5762005‡ 2,586 32,760 989 19,633 310 603 3,885 52,9962006‡ 2,568 34,525 1,027 20,601 276 568 3,870 55,6942007‡ 2,483 36,272 1,016 21,168 262 516 3,761 57,9572008‡ 2,463 37,893 1,027 21,525 281 531 3,771 59,9492009‡ 2,402 38,306 964 20,638 237 527 3,603 59,470
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.*Corrected to include industrial policies.‡Includes fraternal benefit societies.1Prior to 1973, death payments under credit life are included in individual and group categories.
56 American Council of Life Insurers
Table 5.10Health Insurance Benefit Payments by Life Insurers, by year (millions)
Year Group Individual Total
1948 $225 $101 $3261950 375 119 4941955 1,064 326 1,3901960 2,102 531 2,6331965 3,572 841 4,4131970 6,840 1,368 8,2081975 12,410 1,910 14,3201980 19,759 3,279 23,0381981 21,049 3,425 24,4741982 22,288 3,767 26,0551983 22,799 4,113 26,9121984 22,782 4,271 27,0531985 22,830 4,468 27,2981986 24,249 4,717 28,9661987 29,452 5,417 34,8691988 32,063 6,320 38,3831989 32,375 7,057 39,4321990 32,054 7,956 40,0101991 33,933 8,672 42,6051992 35,434 9,516 44,9501993 35,775 10,232 46,0071994 48,218 11,856 60,0741995 51,674 13,040 64,7141996 53,297 13,401 66,6981997 53,393 14,039 67,4321998 55,239 14,791 70,0301999 58,203 16,261 74,4642000 61,098 17,685 78,7842001 58,211 18,093 76,3042002 59,523 19,200 78,7232003‡ 60,317 20,812 81,1292004‡ 65,237 22,551 87,7892005‡ 59,313 19,615 78,9282006‡ 62,407 34,048 96,4552007‡ 66,641 38,982 105,6232008‡ 71,376 47,089 118,4652009‡ 71,077 50,501 121,578
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Figures exclude policy dividends. 1994–96 data have been revised to reflect the addition of life insurers that sell accident and health insurance. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.
6When a primary insurance company transfers or cedes
some insurance risk to another company that accepts or
assumes the risk, reinsurance results. For life insurers, the
risk transferred may be mortality, surrender, investment
risk, or a combination of the three.
Reinsurance has made greater face amounts of life
insurance coverage possible. An applicant who is an
unusual risk—or who needs a life insurance policy with
a face amount larger than a company’s retention limit
(the amount one company can judiciously retain by
itself)—may still be able to obtain the policy if part of
the risk is transferred to a reinsurer. A ceding company
frequently wants to limit its mortality risk on an insured,
and sometimes to limit such risk on a group of policies
to avoid fluctuations in claim levels, or to lower the risk
of claims involving multiple deaths from single events.
Reinsurance also can reduce the risk facing a company
when policies with a high probability of lapse or
surrender are issued, as in policies whose premiums rise
sharply from one year to the next. Similarly, reinsurance
may limit the investment risk inherent in high asset
concentrations from single products, such as annuities.
In 2009, 88 percent of life insurers with life premiums
ceded at least some of those premiums as reinsurance.
Among insurers with accident and health premiums,
85 percent ceded accident and health premiums as
reinsurance. In contrast, only 43 percent of insurers doing
annuity business in 2009 ceded annuity considerations,
excluding deposit-type funds.
AllocAting Risk
Reinsurance spreads the risk of loss between two
companies. The risk can be spread even further if the
ceding company uses more than one reinsurer, or the
reinsurer in turn transfers some of that risk to another
reinsurer, or retrocessionaire.
In the most basic reinsurance arrangement, a single
primary insurer cedes business to a single reinsurer,
usually an independent firm operating in the open
marketplace. The reinsurer also can be an affiliate of
the ceding company, when both companies are owned
by a parent company. This captive reinsurer reinsures
risks exclusively from an affiliated company or group
of companies.
Reinsurance is frequently arranged between a primary
ceding company and a group of reinsurers. Methods for
allocating risk to a group include:
n Quota share Each reinsurer receives a specified
percentage of each risk ceded to the group.
n Layering Risk is ceded in layers of insurance
amounts: One reinsurer receives all reinsurance
up to the limit of the first layer, a second reinsurer
receives all reinsurance beyond the first layer up to
the limit of the second layer, and so on.
n Alphabet split Risk is ceded among several
reinsurers alphabetically based on the insureds’
surnames: Those whose last names begin with
A–F go to the first reinsurer, and so on, until
all reinsurance is allocated. This arrangement is
sometimes used for automatic insurance.
Once risk is ceded from a primary insurer, the reinsurer
in turn may need to cede at least some of that risk,
particularly if it is unusually large or exceeds the
reinsurer’s own retention limit. Transferring risk from one
reinsurer to another, or retroceding, may involve similar
REINSURANCE
58 American Council of Life Insurers
arrangements: A reinsurer may retrocede risk to a group
of reinsurers, or retrocessionaires, each of which may
in turn retrocede some of that risk to another group of
retrocessionaires.
Total premiums from reinsurance assumed in 2009 was
$70 billion, a decrease of 4 percent from 2008 (Table
6.1). The average annual growth of premiums from
reinsurance assumed between 1999 and 2009 was 4
percent. In the accident and health market, individual
premiums assumed grew at a 11 percent average annual
rate between 1999 and 2009. Data for all three markets
include retrocessions.
MAnAging Risk
The need to transfer mortality, surrender, or investment
risk is the main reason for ceding companies to engage
in reinsurance. In traditional reinsurance, the company
transferring the risk retains its financial relationship with,
and legal obligation to, the policyholder—to the point
that policyholders may not even be aware that part of
the risk on their policies is covered by an assuming
company, or reinsurer. This type of reinsurance is
sometimes called indemnity reinsurance, because one
company indemnifies another for losses incurred.
Another type of reinsurance involves the total and
permanent transfer of risk from one company to another.
In assumption reinsurance, the reinsurer replaces the
ceding company in transactions on sections of business,
issuing new policyholder certificates. In effect, one
company purchases a section of business from another
company and becomes directly and legally responsible to
the policyholder, while the original company terminates
its future obligations.
References to reinsurance in this chapter signify only
indemnity reinsurance.
Underwriting strength
A closely related motivation for reinsurance is obtaining
the reinsurer’s underwriting assistance and proficiency.
Reinsurers review and maintain policy and claim records
on a large volume of risks from many ceding companies
whose policyholders are diverse and geographically
distributed. The risk pool from which they develop and
provide underwriting knowledge is larger and wider
than is normally available to a single primary insurer.
Underwriting is further strengthened when risk is spread
to more than one reinsurer or retrocessionaire, because
of the exposure to an even broader range of policies and
claims. Confidence that underwriters are competently
and professionally meeting its underwriting needs allows
a ceding company to concentrate on other activities to
expand its business.
Product Flexibility
Another reason to reinsure is the opportunity it gives
a ceding company to exit from some product lines
and enter others. If a company’s name is commonly
associated with a particular product line that it wishes
to discontinue, the company can reinsure most or all of
the risk on the product.
Conversely, if a company wants to enter a particular
product line, reinsurers can help with product
development and assume some of the product’s risk.
Later, as the primary insurer gains more confidence in its
ability to underwrite and develop the product, recapture
provisions in the reinsurance treaty would allow it to
take back some of the risk the reinsurer assumed.
Financial Positioning
Reinsurance also enables a ceding company to manage
its financial position. A reinsurer can provide allowances
based on its anticipation of future profits, which increases
the ceding company’s statutory earnings and surplus
during the year paid.
If the reinsurer establishes a proportionate share of
reserves on its books for policies reinsured, the ceding
company is not limited to using that surplus to set
up legally required reserves—an option especially
valuable when issuing new policies, in which initial
costs (expenses plus reserves) are higher than premiums
received. Similarly, a company can improve its risk-based
capital ratio by reinsuring part of its risk.
Companies further consider tax advantages when
contemplating reinsurance arrangements. When the
ceding company’s primary goal is managing and
improving its financial position, the risk transfers are
known as financial reinsurance.
59Reinsurance
The face amount of life reinsurance assumed increased
by 19 percent to $2.4 trillion in 2009 (Table 6.2).
Individual life reinsurance assumed increased by 13
percent and group reinsurance assumed increased by 37
percent. The number of life policies assumed increased
by 20 percent in 2009.
tyPes oF ReinsURAnce
Various reinsurance plans are available based on ceding
companies’ needs and their reasons for reinsuring.
Plans can be broadly classified as either proportional
reinsurance, specifying in advance the amounts or
percentages of risk for which the reinsurer is liable,
or nonproportional, specifying instead the loss limits,
time limits, or conditions beyond which a reinsurer will
assume some or all of the benefit payments.
Proportional Reinsurance
Specified amounts or percentages are shared between
ceding companies and reinsurers in proportional
reinsurance. Excess of retention allocates risk by amount:
The ceding company establishes a dollar amount for
which it is willing to retain risk, and the reinsurer
assumes risk over this amount, up to the reinsurer’s
retention limit. In contrast, quota share allocates by
percentage, where the ceding company and reinsurer
establish the percentage of risk for which each will retain
or assume responsibility.
Proportional plans, commonly used in life insurance,
encompass four categories:
n Yearly renewable term (YRT) reinsurance The
mortality risk, but not the permanent plan reserves,
is transferred to the reinsurer for a premium that
varies each year with the amount at risk and ages
of the insured. While YRT reinsurance allows a
ceding company to transfer mortality risk, it leaves
the company responsible for establishing reserves.
n Coinsurance The ceding company transfers a
proportionate share of all the policy risks and cash
flows except the policy fee. The reinsurer receives
its share of premiums, pays its share of benefits,
sets up its share of reserves, and pays an allowance
to the ceding company. Unlike YRT reinsurance,
coinsurance relieves strain on the ceding company’s
surplus.
n Coinsurance with funds withheld The ceding
company keeps the premiums normally paid to a
reinsurer, while the reinsurer keeps the allowances
normally paid to the ceding company. This
arrangement limits cash flow between the two
companies, reinforcing the stability of their cash
accounts.
n Modified coinsurance The reinsurer transfers its
share of reserves back to the ceding company while
the risk remains with the reinsurer. The ceding
company, however, must pay interest to replace
what the reinsurer would have earned had it retained
its share of the reserve.
Both coinsurance with funds withheld and modified
coinsurance enable a ceding company to take statutory
credit in certain circumstances, reduce credit risk, secure
credit, and retain control over investments.
nonproportional reinsurance
Nonproportional plans, commonly used in health
insurance, include four types:
n Stop loss The reinsurer remits some or all of a ceding
company’s aggregate claims above a predetermined
dollar amount (the attachment point), or above a
percentage of premiums during a specified period.
n Spread loss The ceding company pays back the
remitted sum over a period of years, usually through
interest-increased reinsurance premiums.
n Excess of time Most often used for disability or long-
term care reinsurance, this type of plan specifies the
time after which a reinsurer pays some or all of the
claims.
n Catastrophe The reinsurer covers claims that
exceed a specified amount or number of insureds
due to a single event resulting in more than one
loss, as in an accident or natural disaster.
60 American Council of Life Insurers
Table 6.1ReinsuranceAssumedandCeded—Premiums
Millions Average annual percentage change
1999 2008 2009 1999/2009 2008/2009
PReMiUMs FRoM AssUMed bUsinesslife insurance Individual $15,834 $34,701 $37,011 8.9 6.7 Group 3,629 3,831 4,866 3.0 27.0 Credit 1,037 345 201 -15.2 -41.8
Total 20,500 38,877 42,077 7.5 8.2
Annuity considerations1
Individual 5,834 13,309 6,453 NC -51.5 Group 2,491 604 599 NC -0.8Total 8,326 13,913 7,053 NC -49.3
Accident and health insurance Individual 2,553 7,206 7,262 11.0 0.8 Group 13,288 12,276 13,164 -0.1 7.2 Credit 1,088 307 297 -12.2 -3.5Total 16,928 19,789 20,722 2.0 4.7
Aggregate total 45,754 72,579 69,852 4.3 -3.8
PReMiUMs PAid on ceded bUsinesslife insurance Individual $18,072 $58,455 $63,036 13.3 7.8 Group 4,049 6,163 9,524 8.9 54.5 Credit 1,698 777 607 -9.8 -21.8
Total 23,819 65,395 73,167 11.9 11.9
Annuity considerations1
Individual 5,746 30,010 79,718 NC 165.6 Group 2,364 8,098 6,089 NC -24.8
Total 8,111 38,108 85,807 NC 125.2
Accident and health insurance Individual 4,496 12,557 11,215 9.6 -10.7 Group 14,723 10,930 14,625 -0.1 33.8 Credit 1,766 608 519 -11.5 -14.5
Total 20,985 24,094 26,359 2.3 9.4
Aggregate total 52,914 127,597 185,333 13.4 45.2
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes.NC: Not calculated.1From 2001, excludes deposit-type funds as income due to codification, making data incomparable with previous years.
61Reinsurance
Table 6.2LifeReinsuranceAssumed(faceamount)
Millions Average annual percentage change
Assumed business 1999 2008 2009 1999/2009 2008/2009
Face amount (millions) Individual $1,396,913 $1,507,697 $1,704,748 2.0 13.1 Credit 38,273 7,550 6,379 -16.4 -15.5 Group 71,983 506,892 692,009 25.4 36.5
Total 1,507,169 2,022,139 2,403,136 4.8 18.8
Policies (units) Individual 54,178,679 14,255,105 21,576,068 -8.8 51.4 Credit 6,032,379 1,044,496 1,017,799 -16.3 -2.6 Group 2,900,511 10,349,896 8,300,257 11.1 -19.8
Total 63,111,569 25,649,497 30,894,124 -6.9 20.4
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Note: NAIC does not endorse any analysis or conclusions based on use of its data.
62 American Council of Life Insurers
7People buy life insurance to protect their dependents
against financial hardship when the insured person, the
policyholder, dies. Many life insurance products also
allow policyholders to accumulate savings that can be
used in a time of financial need. Most American families
depend on life insurance to provide this economic
protection: Seventy-eight percent owned some type of
life insurance in 2004, according to LIMRA International.
Americans purchased $3.0 trillion of new life insurance
coverage in 2009, 3 percent less than in 2008 (Table 7.1).
By the end of 2009, total life insurance coverage in the
United States was $18.1 trillion (Figure 7.1), a decrease
of 5 percent from 2008.
Three types of life insurance policies predominate the
market. Individual insurance is underwritten separately
for each individual who seeks insurance protection.
Group insurance is underwritten on a group as a whole,
such as the employees of a company or the members of
an organization. Credit insurance guarantees payment of
some debt, such as a mortgage or other loan, in the event
the insured person dies, and can be bought on either
an individual or a group basis. Insurance on loans of 10
years’ or less duration is classified as credit insurance
in National Association of Insurance Commissioners
accounts; insurance on longer loans is included in
individual or group policy data in this chapter. Life
insurance policies offered by fraternal benefit societies
are considered individual insurance.
IndIvIdual lIfe Insurance
Individual life is the most widely used form of life
insurance protection—57 percent of all life insurance in
force in the United States at year-end 2009 (Table 7.1).
Typically purchased through life insurance agents, this
insurance is issued under individual policies with face
amounts as low as $1,000, although larger minimum
amounts are more typical in today’s market. While
individual life is principally used for family protection, it
also is widely used for business purposes. A business may
purchase life insurance to protect against the economic
loss that would result from the death of the owner or a
key employee.
Individual life insurance protection in the United States
totaled $10.3 trillion at the end of 2009 and has grown
at an average annual rate of 1 percent since 1999, when
$9.2 trillion was in force (Table 7.1).
The size of newly purchased individual life policies
declined in 2009 (Figure 7.2). The average, new individual
life policy decreased since 2007 to $172,024. The number
of individual policies purchased, however, fell 1 percent
in 2009 (Table 7.1).
Individual life policies offer two basic types of protection:
covering a specified term, or permanently covering one’s
whole life.
lIfe Insurance
64 American Council of Life Insurers
Types of Policies
Term Insurance
Term insurance policies provide life insurance coverage
for a specified period, usually greater than one year. Term
policies provide no further benefits when the term expires,
and no buildup of cash value occurs. If this insurance is
not renewed at the end of its term, coverage lapses and
no payment would be made to the beneficiary in the
event of death.
Of new individual life policies purchased in 2009, 41
percent, or 4 million, were term insurance (Table 7.2),
totaling $1.3 trillion, or 74 percent, of the individual life
face amount issued. The most popular form of term
insurance is level term, which offers a fixed premium.
Permanent Insurance
Unlike term insurance, permanent life (or whole life)
insurance provides protection for as long as the insured
lives. Permanent life policies also have a savings
component, building cash value that can help families
meet financial emergencies, pay for special goals, or
provide income for retirement years.
There are four types of permanent life insurance policies:
traditional whole life, universal life (UL), variable life (VL),
and variable-universal life (VUL). The annual premium for
traditional whole life policies remains constant throughout
the life of the policy. In earlier years, the premium is
higher than the actual cost of the insurance, but in later
years it becomes substantially lower than the actual cost
of protection. The excess amount of each premium in the
early years is held in reserve as the policy’s cash value. This
cash value grows over time from investment earnings and
future premium payments, providing funds for the cost
of coverage as the insured grows older. If a policyholder
decides to give up the insurance protection, he or she
receives the cash value upon surrendering the policy,
less any outstanding policy loans. Universal life allows
varying premium payment amounts subject to a certain
minimum and maximum. For variable life, the death
benefit and cash value vary subject to the performance
of a portfolio of investments chosen by the policyholder.
VUL combines the flexible premium payment options of
UL with the varied investment options of VL.
In 2009, direct purchases of permanent life constituted 59
percent of U.S. individual life insurance policies issued
and 26 percent of the total face amount issued (Table 7.2).
Participating and Nonparticipating Insurance
Traditional whole life and term insurance policies can be
purchased on a participating or nonparticipating basis.
A participating policy allows the policyholder to share
in the insurance company’s surplus. With this type of
life insurance, a policyholder receives annual dividends
representing that portion of the premium not needed
by the company for death payments to beneficiaries,
additions to reserves, or administrative expenses. More
than three-fourths of individual life policies purchased
were nonparticipating at $1.3 trillion (76%) in 2009 (Table
7.3).
Characteristics of Individual Policies
Lapses and Surrenders
A policy lapses if its premium is not paid by the end
of a specified time, often called the grace period.
Policyholders have different reasons for terminating their
policies, sometimes using cash values to address financial
emergencies or achieve long-term goals. Rates of voluntary
policy termination by policyholders vary considerably
among life insurers. Each company’s rate depends on
many factors, including the types of policies written and
the ratio of new policies to older ones in force with the
company.
The voluntary termination rate of individual life insurance
policies has reached 7.3 percent by 2009 (Table 7.4). Of
the individual life policies that have been voluntarily
terminated, 22% were surrendered.
The life insurance business vigorously seeks to minimize
the lapsing of policies. For example, agent training focuses
on realistic identification of clients’ life insurance needs,
and careful analysis of the use of family income for
protection. Since the voluntary termination rate is higher
for policies on which loans are outstanding, companies
urge that loans be used only in genuine financial
emergencies, and that they be repaid promptly.
65Life Insurance
Most insurers offer policyholders time after their policy is
delivered to consider whether to keep the policy. These
companies will refund the premium in full if, within the
prescribed time, the policyholder decides not to keep
his or her policy.
Some policies that lapse still have a cash value, entitling
the policyholder to some form of payment under a cash
surrender value non-forfeiture option. All coverage under
the policy terminates at the time of the surrender.
Disability Provisions
Besides the benefit payable upon death of the insured,
many life insurance policies or policy riders provide
disability benefits to cover financial losses that result from
a sickness or injury. The most common supplementary
benefit is waiver of premium. Of individual life policies
in force in 2009, 90 percent, or 37 million, allowed the
premium to be waived during disability (Table 7.6),
representing $3.6 trillion, or 98 percent, of the individual
life face amount in force.
Group lIfe Insurance
Group life insurance is a contract between an insurance
company and some group to insure all of the group’s
members, usually under term coverage. Common
examples are employer-provided life insurance and
insurance offered through unions and professional
associations. Employees or other group members receive
certificates denoting their participation in the group
coverage. In 2009, group insurance represented 39 percent
of all life insurance policies in force.
Group purchases increased 8 percent in 2009 to $1.2
trillion (Table 7.1). At the end of 2009, group life insurance
provided $7.7 trillion of protection, 12 percent less than
a year earlier.
Group insurance contracts can provide benefits beyond
term insurance. Employees often can retain coverage
after retirement by paying premiums directly to the
insurer. Many policies also offer survivor benefits,
usually continuing monthly payments to the spouse of
an employee who dies before retirement; payments may
extend for life or to the age at which Social Security
retirement payments become available, but cease on
remarriage. Contingent benefits to dependent children in
the event of a spouse’s death are available as well. The
initial value of these survivor benefits can range from three
to 10 times an employee’s annual salary.
As with individual life policies, group policies can be
purchased on either a participating or nonparticipating
basis. Most group life policies are nonparticipating (Table
7.3)—96 percent of those purchased in 2009, at $1.1
trillion.
The voluntary termination rate of group life insurance
policies increased to 7.0 percent from 6.9 percent a year
earlier. The voluntary lapses in 2009 dropped to 6.6 from
6.7 in 2008 (Table 7.4).
Group policies also provide disability benefits (Table 7.6).
Of group life policies in force in 2009, 96 percent, or 43
million, provided for waiver of premium, representing
$4.1 trillion, or 92 percent, of the group life face amount
in force.
credIt lIfe Insurance
Credit life insurance pays the balance on loans of 10 years’
or less duration if the borrower dies before repaying the
amount due. At year-end 2009, $126 billion of credit life
insurance was in force, down 15 percent from the previous
year (Table 7.1).
Credit life, commonly part of consumer credit contracts,
is term insurance, generally decreasing in amount as a
loan is repaid. It protects the borrower’s family, as well as
the lender, against unpaid debt that may be left at death.
Life insurers issue credit insurance through lenders such
as banks, finance companies, credit unions, and retailers,
who in turn make arrangements with borrowers.
As with other life policies, credit policies can be purchased
on either a participating or nonparticipating basis. Of
credit life policies purchased in 2009, 79 percent, or $54
billion, were nonparticipating (Table 7.3).
66 American Council of Life Insurers
$904 million in other claims were in dispute. Of this
amount, $114 million was paid in 2009 and $579
million still resisted at the end of the year (Table 7.7).
Table 7.1life Insurance in the united states
Life Insurance Average annual percent change
1999 2008 2009 1999/2009 2008/2009
PURCHASESFace amount (millions) Individual1 $1,399,848 $1,869,554 $1,744,357 2.2 -6.7 Group 966,858 1,073,273 1,155,824 1.8 7.7 Credit 141,313 104,482 68,849 -6.9 -34.1
Total 2,508,019 3,047,309 2,969,030 1.7 -2.6
Policies (thousands) Individual 11,673 10,207 10,139 -1.4 -0.7 Group (certificates) 26,912 18,392 19,051 -3.4 3.6 Credit 20,318 13,005 10,944 -6.0 -15.9
Total 58,902 41,604 40,134 -3.8 -3.5
IN FORCEFace amount (millions) Individual $9,172,397 $10,254,379 $10,324,455 1.2 0.7 Group 6,110,218 8,717,453 7,688,328 2.3 -11.8 Credit 213,453 148,443 125,512 -5.2 -15.4
Total 15,496,069 19,120,276 18,138,295 1.6 -5.1
Policies (thousands) Individual 161,630 156,008 153,410 -0.5 -1.7 Group (certificates) 159,269 147,728 112,799 -3.4 -23.6 Credit 45,575 30,949 24,881 -5.9 -19.6Total 366,474 334,685 291,091 -2.3 -13.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Policies issued by fraternal benefits societies are considered individual business.
polIcy claIms resIsted or compromIsed
From time to time, life insurers find it necessary to
delay or deny payment of claims due to material
misrepresentation, suicide within the contestable
period, or no proof of death, among other reasons.
In 2009, $396 million in new claims along with
67Life Insurance
Figure 7.1Individual, Group, and credit life Insurance in force in the united states (face amount)
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers, and, as of 2003, fraternal benefit societies.
CreditGroup
Individual
$ Trillions
2009 2007 2005 2003 2001 1999 1997 1995 1993 1991198919871985
Individual, Group, and Credit Life Insurance in Force in the United States (face amount)Figure 7.1
5
10
15
20
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers, and, as of 2003, fraternal benefit societies.
Figure 7.2average face amount of Individual life Insurance policies purchased
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers, and, as of 2003, fraternal benefit societies.
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers, and, as of 2003, fraternal benefit societies.
$Thousands
Average Face Amount of Individual Life Insurance Policies PurchasedFigure 7.2
6981
103
7783
120 114128
157172175
20092007200520032001199919971995199319911989
50
0
100
150
200
68 American Council of Life Insurers
Table 7.2Individual life Insurance purchases in the united states, by plan type, 2009
Policies in thousands/Amounts in millions
Policies Percent Face amount Percent
Term insurance Decreasing 34 0.3 $4,042 0.2 Level 4,006 40.8 1,188,862 69.4
Decreasing other term1 NA NA 3,909 0.2 Level other term2 NA NA 70,368 4.1 Term additions NA NA 1,531 0.1Total 4,039 41.1 1,268,712 74.1
Whole life and endowment 5,783 58.9 444,396 25.9
Aggregate total 9,823 100.0 1,713,108 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Note: NAIC does not endorse any analysis or conclusions based on use of its data.NA: Not available.1Includes decreasing term insurance on spouses and children under family policies.2Includes level term insurance on spouses and children under family policies.
Table 7.3life Insurance purchases, by participating status
Individual Group Credit Total
Face Face Face Face amount amount amount amount (millions) Percent (millions) Percent (millions) Percent (millions) Percent
1999 Nonparticipating $1,058,829 75.6 $705,329 73.0 $116,626 82.5 $1,880,785 75.0 Participating 341,019 24.4 261,528 27.0 24,687 17.5 627,234 25.0
Total 1,399,848 100.0 966,858 100.0 141,313 100.0 2,508,019 100.0
2008 Nonparticipating $1,478,971 79.1 $1,027,759 95.8 $86,879 83.2 $2,593,610 85.1 Participating 390,583 20.9 45,514 4.2 17,603 16.8 453,700 14.9
Total 1,869,554 100.0 1,073,273 100.0 104,482 100.0 3,047,309 100.0
2009 Nonparticipating $1,330,605 76.3 $1,106,421 95.7 $54,422 79.0 $2,491,448 83.9 Participating 413,752 23.7 49,403 4.3 14,426 21.0 477,582 16.1Total 1,744,357 100.0 1,155,824 100.0 68,849 100.0 2,969,030 100.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.
69Life Insurance
Table 7.4voluntary termination rates for life Insurance policies, calculated by face amount (percent)
1999 2000 2001‡ 2002‡ 2003‡ 2004‡ 2005‡ 2006‡ 2007‡ 2008‡ 2009‡
Lapse rate
Individual 6.2 7.1 5.9 6.6 5.7 5.4 4.9 4.9 5.1 6.1 5.7
Group 8.2 9.0 11.2 8.7 8.4 9.5 8.4 8.1 6.7 6.7 6.6
Credit 4.6 3.9 6.8 5.6 5.3 5.3 6.9 7.4 6.9 6.1 9.9
Surrender rate
Individual 2.1 2.2 1.8 1.9 1.9 1.6 1.7 1.4 1.3 1.5 1.6
Group 0.4 0.3 0.5 0.5 0.6 0.3 0.2 0.5 0.1 0.2 0.3
Credit 12.2 10.7 12.6 13.7 11.8 10.9 10.0 9.4 7.9 8.3 7.0
Combined termination rate
Individual 8.2 9.4 7.7 8.6 7.6 7.0 6.6 6.3 6.4 7.6 7.3
Group 8.6 9.3 11.7 9.2 9.0 9.7 8.6 8.6 6.8 6.9 7.0
Credit 16.8 14.5 19.4 19.3 17.1 16.2 16.9 16.8 14.8 14.4 16.9
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.
Table 7.5voluntary termination rates for life Insurance policies, calculated by number of policies (percent)
1999 2000 2001‡ 2002‡ 2003‡ 2004‡ 2005‡ 2006‡ 2007‡ 2008‡ 2009‡
Lapse rate
Individual 5.6 5.7 6.0 8.3 5.7 5.9 5.6 5.8 5.5 6.8 5.7
Group 9.3 10.0 11.3 8.9 8.6 9.1 8.4 7.9 6.6 6.6 10.0
Credit 6.8 8.2 5.9 8.2 6.0 4.5 5.9 5.5 5.4 5.4 10.1
Surrender rate
Individual 1.4 1.5 1.6 1.2 1.3 1.1 1.3 1.1 1.1 1.1 1.2
Group 0.6 0.3 0.3 0.4 0.6 0.2 0.1 0.2 0.1 0.2 0.2
Credit 12.7 12.7 13.6 14.1 11.3 10.8 10.4 18.7 9.3 18.0 10.0
Combined termination rate
Individual 7.1 7.1 7.6 9.6 6.9 7.0 6.9 6.9 6.6 7.9 6.9
Group 9.9 10.3 11.6 9.3 9.2 9.3 8.6 8.0 6.7 6.8 10.2
Credit 19.6 20.9 19.4 22.2 17.4 15.4 16.2 24.1 14.6 23.4 20.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.‡Includes fraternal benefit societies.
70 American Council of Life Insurers
Table 7.6life Insurance With disability provisions, 2009
Policies and certificates in thousands/Amounts in millions
Percent Percent of policies of amount Policies in force Face amount in force
Individual1, 2
Waiver of premium 37,401 24.4 $3,634,754 35.2 Disability income 395 0.3 21,933 0.2 Extended benefits 1 0.0 0 0.0 Other 3,958 2.6 40,413 0.4
Total 41,755 27.2 3,697,101 35.8
Group3
Waiver of premium 43,368 38.4 4,127,509 53.7 Disability income 492 0.4 23,089 0.3 Extended benefits 910 0.8 108,500 1.4 Other 333 0.3 247,642 3.2
Total 45,102 40.0 4,506,740 58.6
Credit4
Waiver of premium 58 0.2 5,883 4.7 Disability income 1,091 4.4 5,579 4.4 Extended benefits 20 0.1 141 0.1Total 1,169 4.7 11,604 9.2
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Does not include fraternal benefit societies.2Policies in force totaled 153 million, with a face amount of $10.3 trillion.3Certificates in force totaled 113 million, with a face amount of $7.7 trillion.4Policies in force totaled 25 million, with a face amount of $125 billion.
71Life Insurance
Table 7.7new policy claims resisted or compromised (thousands)
20001 2008 2009
Face Face Face amount Percent amount Percent amount Percent
New claims in dispute $172,714 28.8 $373,024 34.4 $396,053 30.5All other claims in dispute 427,952 71.2 712,443 65.6 903,736 69.5
Total claims in dispute 600,665 100.0 1,085,467 100.0 1,299,790 100.0
Amount paid for new claims 11,387 14.8 21,867 24.3 28,587 25.0 Amount paid for claims previously resisted 65,445 85.2 68,143 75.7 85,834 75.0
Total amount paid 76,831 100.0 90,011 100.0 114,422 100.0
Amount resisted at year’s end2 278,885 482,539 578,604
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Data for 1999 is not available.2Not equal to subtracting total amount paid from total claims in dispute. The amount paid for claims disposed of usually varies from the amount claimed.
72 American Council of Life Insurers
Table 7.8life Insurance purchases, by year
Policies and certificates in thousands/Amounts in millions
Individual Group Total
Policies/ Year Policies Face amount Certificates Face amount Certificates Face amount
1940 17,872 $10,039 285 $691 18,157 $10,7301945 16,212 13,289 681 1,265 16,893 14,5541950 20,203 22,728 2,631 6,068 22,834 28,7961955 21,928 37,169 2,217 11,258* 24,145 48,427*1960 21,021 59,763 3,734 14,645 24,755 74,4081965 20,429 90,781 7,007 51,385+ 27,436 142,166+1970 18,550 129,432 5,219 63,690+ 23,769 193,122+1975 18,946 194,732 8,146 95,190+ 27,092 289,922+1980 17,628 389,184 11,379 183,418 29,007 572,6021985 17,637 911,666 16,243 319,503* 33,880 1,231,169*1986 17,116 934,010 17,507 374,741+ 34,623 1,308,751+1987 16,455 986,984 16,698 365,529 33,153 1,352,5131988 15,796 996,006 15,793 410,848 31,589 1,406,8541989 14,850 1,020,971 15,110 420,707 29,960 1,441,6781990 14,199 1,069,880 14,592 459,271 28,791 1,529,1511991 13,583 1,041,706 16,230 573,953+ 29,813 1,615,659+1992 13,452 1,048,357 14,930 440,143 28,382 1,488,5001993 13,664 1,101,476 17,574 576,823 31,238 1,678,2991994 13,835 1,057,233 18,390 560,232 32,225 1,617,4651995 12,595 1,039,258 19,404 537,828 31,999 1,577,0861996 12,022 1,089,268 18,761 614,565 30,783 1,703,8331997 11,734 1,203,681 19,973 688,589 31,707 1,892,2701998 11,559 1,324,671 20,332 739,508 31,891 2,064,1791999 11,673 1,399,848 26,912 966,858 38,584 2,366,7062000 13,345 1,593,907 21,537 921,001 34,882 2,514,9082001 14,059 1,600,471 26,036 1,172,080 40,095 2,772,5512002 14,692 1,752,941 24,020 1,013,728 38,713 2,766,6692003‡ 13,821 1,772,673 21,946 1,050,318 35,767 2,822,9922004‡ 12,581 1,846,384 25,872 1,101,599 38,453 2,947,9832005‡ 11,407 1,796,384 23,112 1,039,878 34,519 2,836,2622006‡ 10,908 1,813,100 18,378 1,022,080 29,287 2,835,1802007‡ 10,826 1,890,989 19,962 1,102,654 30,788 2,993,6432008‡ 10,207 1,869,554 18,392 1,073,273 28,599 2,942,8272009‡ 10,139 1,744,357 19,051 1,155,824 29,190 2,900,181
Sources: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission; LIMRA International.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent direct business and exclude revivals, increases, dividend additions, and reinsurance acquired. 1940–73 data exclude credit life insurance. Beginning with 1974, data include long-term credit insurance (life insurance on loans of more than 10 years’ duration). Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.*Includes Federal Employees’ Group Life Insurance of $1.9 billion in 1955, $84.4 billion in 1981, and $10.8 billion in 1985.+Includes Servicemen’s Group Life Insurance of $27.8 billion in 1965, $17.1 billion in 1970, $1.7 billion in 1975, $45.6 billion in 1981, $51 billion in 1986, and $166.7 billion in 1991.‡Includes fraternal benefit societies.
73Life Insurance
Table 7.9life Insurance in force in the united states, by year (millions)
Individual Group Credit Total
Policies/ Year Policies Face amount Certificates Face amount Policies1 Face amount Certificates Face amount
1900 14 $7,573 — — — — 14 $7,5731905 22 11,863 — — — — 22 11,8631910 29 14,908 — — — — 29 14,9081915 41 20,929 * $100 — — 41 21,0291920 64 38,966 2 1,570 * $4 66 40,5401925 94 65,210 3 4,247 * 18 97 69,4751930 118 96,539 6 9,801 * 73 124 106,4131935 114 88,155 6 10,208 1 101 121 98,4641940 122 100,212 9 14,938 3 380 134 115,5301945 149 129,225 12 22,172 2 365 163 151,7621950 172 182,531 19 47,793 11 3,844 202 234,1681955 192 256,494 32 101,345 28 14,493 252 372,3321960 195 381,444 44 175,903 43 29,101 282 586,4481965 196 539,456 61 308,078 63 53,020 320 900,5541970 197 773,374 80 551,357 78 77,392 355 1,402,1231975 204 1,122,844 96 904,695 80 112,032 380 2,139,5711980 206 1,796,468 118 1,579,355 78 165,215 402 3,541,0381985 186 3,275,539 130 2,561,595 70 215,973 386 6,053,1071990 177 5,391,053 141 3,753,506 71 248,038 389 9,392,5971991 170 5,700,252 141 4,057,606 64 228,478 375 9,986,3361992 168 5,962,783 142 4,240,919 56 202,090 366 10,405,7921993 169 6,448,885 142 4,456,338 52 199,518 363 11,104,7411994 169 6,448,758 145 4,443,179 52 189,398 366 11,081,3351995 166 6,890,386 147 4,604,856 57 201,083 370 11,696,3251996 166 7,425,746 139 5,067,804 50 210,746 355 12,704,2961997 162 7,872,561 142 5,279,042 47 212,255 351 13,363,8581998 160 8,523,258 152 5,735,273 46 212,917 359 14,471,4481999 162 9,172,397 159 6,110,218 46 213,453 367 15,496,0692000 163 9,376,370 156 6,376,127 50 200,770 369 15,953,2672001 166 9,345,723 163 6,765,074 48 178,851 377 16,289,6482002 169 9,311,729 164 6,876,075 42 158,534 375 16,346,3382003‡ 176 9,654,731 163 7,236,191 40 152,739 379 17,043,6612004‡ 168 9,717,377 165 7,630,503 39 160,371 373 17,508,2522005‡ 166 9,969,899 167 8,263,019 40 165,605 373 18,398,5232006‡ 161 10,056,501 177 8,905,646 37 150,289 375 19,112,4362007‡ 158 10,231,765 180 9,157,919 36 149,536 374 19,539,2192008‡ 156 10,254,379 148 8,717,453 31 148,443 335 19,120,2762009‡ 153 10,324,455 113 7,688,328 25 125,512 291 18,138,295
Sources: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission; Spectator Year Book.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent direct business and, beginning with 1959, include Alaska and Hawaii. 1994-97 data for individual amount and group certificates were revised. Individual and group categories include credit life insurance on loans of more than 10 years’ duration; credit category is limited to life insurance on loans of 10 years’ or less duration. Totals represent all life insurance (net of reinsurance) on residents of the United States, whether issued by U.S. or foreign companies.* Fewer than 500,000 ‡ Includes fraternal benefit societies.1Includes group credit certificates.
74 American Council of Life Insurers
8Annuities are financial contracts that pay a steady stream
of income for either a fixed period of time or for the
lifetime of the annuity owner (the annuitant). Most
pension and retirement plan assets held by life insurers
are annuity contracts. Because they can guarantee a
stream of income for life, annuities protect annuity
owners against the possibility of outliving their financial
resources.
Annuities are sold as either immediate annuities or
deferred annuities. Immediate annuities begin making
annuity payments immediately, while deferred annuities
defer the onset of annuity payments until some later date
(typically when the annuity owner retires). During the
deferral or accumulation phase, the annuity owner makes
premium payments into the annuity and the savings
inside the annuity grows to maximize the later annuity
payments back to the annuity owner.
Codification of annual statements, effective for 2001
filings, changed the way certain lines of business are
categorized and reported. This is particularly true of
annuities and deposit-type contracts (e.g., guaranteed
interest contracts or GICs). Prior to 2001, deposit-type
funds were included with annuities; now they are
reported separately. As a result, annuity data prior to
2001 is not comparable with 2001 or later data. For this
reason some of the tables in this chapter only report
data for 2008 and 2009.
During 2009, payments into annuities, known as
considerations (Table 8.1), decreased 28 percent to $256
billion, while annuity reserves (Table 8.2) increased 13
percent to $2.5 trillion.
Annuities provide a variety of features designed to
meet different needs. Depending on risk tolerance, an
annuitant can choose a fixed annuity, which provides
stable returns, or a variable annuity which is backed
by equity investments for potentially greater, but
uncertain, returns. A joint and survivor annuity ensures
an income stream as long as either spouse is alive. Under
some options, payouts will continue to a designated
beneficiary after the annuitant’s death.
Group and IndIvIdual annuItIes
Contributions to group annuities, which are sold through
employer-sponsored retirement plans, decreased to $103
billion in 2009, down 14 percent from 2008 (Table 8.1).
Reserves for this type of annuity accounted for one-third
of all annuity reserves by the end of 2009 (32%), or $797
billion (Table 8.2). Benefit payments to group annuitants
decreased by 6 percent to $25 billion in 2009 (Table 8.3).
Employer-sponsored retirement plans are divided
between two types that differ according to their benefits
structure. Defined benefit plans provide a specified
monthly benefit during retirement. The benefit amount
is usually based on an employee’s salary and length of
service. The employer funds such plans and bears the
entire investment risk.
annuItIes
76 American Council of Life Insurers
$208,965 $128,853 -38.3
119,169 102,727 -13.8
26,842 24,053 -10.4
354,976 255,633 -28.0
Profit-sharing, 401(k), 403(b), and 457 plans are defined
contribution plans. Rather than specifying benefits
and retirement income, this type of plan specifies
contributions, usually as a fixed amount or a percentage
of income, where the employee bears the investment
risk. The benefit received under defined contribution
plans is determined by contributions, investment returns,
and expenses. Annuitization of the balance at retirement
is not mandatory, and lump sums have been the most
popular distribution method.
A person also can buy an annuity directly from a life
insurer. During 2009, Americans deposited $129 billion
in individual annuities, down more than 38 percent from
2008 (Table 8.1). Individual annuity owners received
$42 billion in benefit payments, leaving $1.6 trillion in
individual annuity reserves at year-end 2009 (Tables
8.2–8.3).
supplementary ContraCts, annuItIes CertaIn, and other annuItIes
A supplementary contract is an agreement between an
insurer and a life insurance policyholder or beneficiary
in which the beneficiary chooses to receive the policy’s
proceeds over a period of time instead of as a lump
sum. If this period is the lifetime of the beneficiary,
the contract is a supplementary contract with life
contingencies, essentially a life annuity; if the payments
continue for a specific period, the contract is called a
supplementary contract without life contingencies, or
an annuity certain.
During 2009, $24 billion was deposited into supplementary
contracts without life contingencies and annuities certain,
10 percent less than in 2008 (Table 8.1), and $26 billion
was paid to policyholders or beneficiaries (Table 8.3),
leaving a total reserve of $75 billion at the end of 2009
to back future claims (Table 8.2).
Table 8.1annuity Considerations
Millions Percentchange
2008 2009 2008/2009
Individualannuities1 $208,965 $128,853 -38.3
Groupannuities 119,169 102,727 -13.8
Annuitiescertainandsupplementarycontractswithoutlifecontingencies 26,842 24,053 -10.4
Total 354,976 255,633 -28.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.1Includes supplementary contracts with life contingencies.
77Annuities
Table 8.2reserves for annuity Contracts
Millions Percentchange
2008 2009 2008/2009
Individualannuities1 $1,434,704 $1,639,841 14.3
Groupannuities 715,587 797,989 11.5
Annuitiescertainandsupplementarycontractswithoutlifecontingencies 73,149 74,504 1.9
Total 2,223,441 2,512,334 13.0
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission. Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.1Includes supplementary contracts with life contingencies.
Table 8.3annuity Benefit payments
Millions Percentchange
2008 2009 2008/2009
Individualannuities1 $42,973 $42,032 2.2
Groupannuities 26,674 25,036 -6.1
Annuitiescertainandsupplementarycontractswithoutlifecontingencies 30,225 25,668 -15.1
Total 99,873 92,736 -7.1
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.1Includes supplementary contracts with life contingencies.
78 American Council of Life Insurers
Table 8.4annuity Considerations, by year (millions)
Year Individual1 Group2 Other3 Total
1977 $4,552 $10,422 NA $14,9741978 4,454 11,885 NA 16,3391979 4,976 12,963 NA 17,9391980 6,296 16,133 NA 22,4291981 10,290 17,289 NA 27,5791982 15,196 19,448 NA 34,6441983 14,003 16,541 NA 30,5441984 15,706 27,153 NA 42,8591985 20,891 33,008 NA 53,8991986 26,117 57,595 NA 83,7121987 33,764 54,913 NA 88,6771988 43,784 59,494 NA 103,2781989 49,407 65,590 NA 114,9971990 53,665 75,399 NA 129,0641991 51,671 71,919 NA 123,5901992 61,348 71,297 NA 132,6451993 76,987 79,458 NA 156,4451994 80,832 73,017 NA 153,8491995 77,370 82,565 NA 159,9351996 84,067 92,228 NA 176,2951997 90,192 107,355 NA 197,5471998 95,446 134,047 NA 229,4931999 115,621 154,591 NA 270,2122000 143,071 163,622 NA 306,69320014 141,656 109,599 $22,675 273,93020024 168,428 100,861 22,608 291,89720034 165,943 102,614 21,811 290,36920044 172,140 104,537 24,352 301,02920054 167,032 110,084 25,479 302,59620064 187,083 115,645 26,344 329,07120074 192,503 121,722 27,119 341,34420084 208,965 119,169 26,842 354,97620094 128,853 102,727 24,053 255,633
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.NA: Not available.1For 2000 and 2001, includes supplementary contracts with life contingencies.2Beginning in 1986, data reflect a change in statutory reporting methods mandated by the National Association of Insurance Commissioners.3Includes supplementary contracts without life contingencies, annuities certain, lottery payouts, structured settlements, and income payment options.4Codification effective with 2001 Annual Statement filings changed the way certain lines of business are categorized and reported, particularly deposit-type contracts. Since most guaranteed interest contracts (GICs) and other deposit-type funds are under group contracts, this accounting change has had a substantial effect on group annuities.
79Annuities
Table 8.5annuity reserves, by year
Year Reserves(millions) Year Reserves(millions)
1950 $5,6001960 18,8501965 27,3501970 41,1751975 72,2101980 166,8501981 193,2101982 233,7901983 269,4251984 313,2151985 373,4751986 441,3901987 495,4201988 562,1551989 624,2901990 695,700 1991 745,9501992 768,215
1993 $825,3751994 878,4601995 972,5601996 1,312,4941997 1,454,9621998 1,608,4941999 1,780,6992000 1,819,68020011 1,585,00820021 1,619,07520031 1,899,99420041 2,105,88220051 2,258,24020061 2,415,15820071 2,548,49020081 2,223,44120091 2,512,334
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and, as of 2003, fraternal benefit societies.1Codification effective with 2001 Annual Statement filings changed the way certain lines of business are categorized and reported, particularly deposit-type contracts. Since most guaranteed interest contracts (GICs) and other deposit-type funds are under group contracts, this accounting change has had a substantial effect on group annuities.
80 American Council of Life Insurers
9Disability income insurance and long-term care insurance
provide important financial protection for American
families. Disability income insurance serves as paycheck
protection for workers by replacing a portion of earnings
if an insured employee is unable to work due to accident
or illness. Long-term care insurance protects retirement
savings and alleviates financial hardships that might
otherwise impoverish a family paying for long-term
care needs.
Disability income insurance
Prolonged unemployment due to disability can jeopardize
a worker’s lifestyle and savings for retirement. The risk
of becoming disabled is significant: Eight percent of
working-age Americans reported a chronic condition
that interfered with their ability to work in 2005. Among
Americans disabled as adults, 62 percent are unable to
work, while 38 percent are limited in the amount or type
of work they can perform.
Disability income policies commonly provide 50 to 70
percent of an insured’s pre-disability income while an
insured employee is unable to work due to accident or
illness. In addition to choices in benefits and elimination
periods, some policies provide comprehensive protection
while others define disability more narrowly, covering
only accidental injury or illness. Policies may also include
coverage for partial disability, residual benefits, cost-
of-living adjustments, survivor benefits, and pension
supplements. Many also include benefits to help people
return to work following a disability.
Often insurers will reduce benefits if an employee
is receiving disability payments from other sources.
Workers compensation pays cash benefits to workers
disabled by an on-the-job accident or illness. Because
workers compensation is a state-administered program,
rules governing payment, benefit levels, and length of
coverage vary considerably from state to state. Workers
whose illness or injury is not caused on the job may
be eligible for paid sick leave or state-mandated short-
term disability benefits. The federal disability insurance
program under the Social Security Administration, known
as SSDI, provides cash assistance to people with long-
term disabilities who are unable to work. SSDI’s modest
income support is limited to those who meet a very strict
test of work disability.
Both individual and group disability income insurance
pay benefits as an indemnity—usually weekly or
monthly. Disability income insurance may be offered by
employers, purchased individually, or used to protect a
business. Employers may offer insurance for either short-
or long-term disabilities, or provide comprehensive
disability protection. Some policies reimburse businesses
for expenses associated with disability. Each of these
types of policies is described below.
Individual Disability Income Insurance
Individual disability income policies are sold to the
self-employed, professionals, and to a market of diverse
needs. Some people prefer individual coverage rather
than group coverage because the former is portable.
Workers, whose employers provide only basic coverage,
may buy additional disability insurance through an
Disability income anD lonG-term care insurance
82 American Council of Life Insurers
individual policy. Companies also purchase disability
income insurance to protect or dispose of the business
if a key employee or the owner becomes disabled.
Personal Coverage
Most people buy individual disability income insurance
to protect against long-term disability. Individual policies
typically cover both occupational and non-occupational
accidents and sickness for a selected term. Individual
long-term disability benefits are not subject to income
tax if the policyholder pays the premiums in full. Since
benefits are designed to replace earned income, most
people do not purchase coverage beyond their working
years.
Disability income insurance for individuals is offered
primarily in two forms. Non-cancellable policies give
policyholders the right to continue coverage as long
as premiums are paid on time. The insurer cannot
change the premiums or benefits prior to an age stated
in the policy, usually 65. Insurers also offer guaranteed
renewable policies that can be automatically renewed
with the same benefits. The premium for this type of
policy may be increased only if it is changed for the
entire class of policyholders.
Business Coverage
A small proportion of individual disability income
policies is bought by business owners.
Key-person disability insurance replaces income lost
when an essential employee or owner is unable to
work. Some policies pay benefits directly to the insured
as salary continuation, while others pay benefits to the
business to protect the company from sudden loss of
income, credit, or profits. Another form of protection is
disability buy-sell insurance, which pays benefits to the
business to enable owners to purchase interest in the
company from a disabled partner or owner.
Businesses frequently obtain a disability income policy
to cover business overhead expenses, including wages,
in case the owner becomes disabled. A business also
can purchase reducing term disability insurance to
help cover loan repayments, purchase agreements, or
salary contracts if the owner or key employee becomes
disabled. This type of insurance is in effect for the
length of the loan or other commitment, and coverage
is reduced as the amount due is paid off.
Group Disability Income Insurance
Many disability income policies are offered as part of an
employee group benefit package. Employers purchase
disability coverage from an insurance company or self-
insure the benefits. According to the U.S. Bureau of Labor
Statistics, 38 percent of all workers in private industry
were covered by short-term disability income insurance
in 2009; 31 percent were covered by long-term disability
income insurance.
Short-Term Coverage
Short-term coverage helps protect against loss of income
for employees unable to work because of a temporary
illness or injury. Such sickness and accident plans replace
a portion of earnings for a fixed period of time. Benefits
commonly last 24 weeks, although coverage can range
from 13 to 104 weeks. Short-term disability income
insurance also can offer protection during the waiting
period before a worker becomes eligible for SSDI or
long-term disability coverage.
Disability income insurance pays short-term benefits as
either a percentage of employee earnings or a flat dollar
amount. The most common plans pay a percentage of
earnings, typically replacing from one-half to two-thirds
of pre-disability income. A majority of these plans places
a dollar limit on the weekly or monthly benefit. Benefits
also can vary depending on length of service and other
factors. Most short-term coverage requires a waiting
period, usually one to seven days, before benefits begin.
83Long-Term Care and Disability Income Insurance
Long-Term Coverage
Long-term disability income plans cover both occupational
and non-occupational sickness and accidents. Benefits
typically start when short-term benefits are exhausted
after a waiting period of three to six months following
the onset of disability. These policies generally provide
benefits for persons up to age 65 or Social Security
retirement age. In certain cases, long-term coverage may
provide benefits for life.
Almost all group long-term disability plans coordinate
with Social Security and typically require claimants to
apply for SSDI benefits. Disability insurers frequently
offset benefits payable under private insurance dollar-
for-dollar with SSDI payments. Benefits also are subject
to income tax if the employer pays the premiums; they
are not taxable if the employee pays the premiums.
lonG-term care insurance
Long-term care insurance pays for services to help
policyholders who are unable to perform certain
activities of daily living without assistance—such as
bathing, eating, dressing, using the toilet, and transferring
from bed to chair. This insurance also pays benefits
when the insured person requires supervision due to a
cognitive impairment such as Alzheimer’s disease.
Since the likelihood of chronic illness or disability
increases with age, long-term care insurance traditionally
has been sold to older Americans. However, the younger
the purchaser, the lower the premiums, and within the
last 10 years, group insurance plans have begun covering
working-age people. In 2009, life insurers collected $10.5
billion in net long-term care insurance premiums.
The market for private long-term care insurance is closely
linked to federal and state government policy. Public
funding for long-term care comes from two main sources.
Medicaid—a joint federal-state program that targets low
income people—is the primary government funding
source for long-term care. To qualify, beneficiaries must
deplete most of their assets and meet a strict income test.
Medicare primarily pays for medically related recovery
and rehabilitation services at home or in a nursing home.
There are two basic types of long-term care insurance:
individual insurance and group. The latter is employer-
sponsored or offered through an association. These
products are considered long-term if the benefit is one
year or longer. Long-term care protection also is available
through life insurance policies that accelerate the death
benefits for individuals with chronic conditions.
Long-term care insurance has evolved in response to
changes in the long-term care delivery system and
consumer preferences. When first sold in 1972, policies
covered only skilled care in a nursing home after a period
of hospitalization. Since the mid-1980s, consumers have
demanded greater choice and more help in maintaining
their quality of life. Insurers now offer policies covering
services that promote independent living including
personal care, assisted living, care management, support
for family caregivers, home modifications, homemaker
services, and hospice, in addition to institutional care.
Coverage for long-term care also varies by how benefits
are paid. Traditional indemnity policies offer a fixed
daily payment to eligible beneficiaries, usually in a
nursing home. Other policies reimburse the insured
for expenses, up to the policy’s daily maximum—for
example, $150 per day for nursing home care or $100
per day for home care. Most reimbursement policies
now pool benefit dollars under more flexible spending
limits, so that a beneficiary can receive payment for either
nursing-home care or home- and community-based
care. A third payment method uses a disability model,
providing a cash benefit when eligibility requirements
are met, regardless of whether the insured actually uses
any long-term care services.
Individual Long-Term Care Coverage
Individual long-term care insurance can be tailored
to meet financial and lifestyle goals. The policyholder
selects the length of benefit term (one to five years or
a lifetime) and other options such as the amount of
maximum daily benefit, length of elimination period,
level of care, inflation protection, and nonforfeiture
benefits.
84 American Council of Life Insurers
Most individual long-term care insurance is offered as
a guaranteed renewable policy—renewable with the
same benefits as long as premiums are paid on time.
Premiums cannot be increased unless they are changed
for the entire class of policyholders. Since long-term care
policies do not build cash value, buying a nonforfeiture
benefit or selecting a policy with contingent nonforfeiture
protection allows the insured to receive benefits upon
surrendering the policy. Some policies offer riders that
return premiums upon the death of the insured.
Group Long-Term Care Coverage
Businesses, some state governments, unions, and
fraternal and other associations such as AARP sponsor
group long-term care insurance. Groups can either
purchase long-term care coverage from an insurance
company or self-insure. Under self-insured plans, the
members of the group, usually employees, assume all
risks and expenses of providing long-term care coverage.
Most employers offering this benefit purchase group
insurance coverage.
Group long-term care insurance typically is offered as a
voluntary benefit for which the employee pays some or
all of the premium. Long-term care insurance purchased
through the workplace also is portable: Employees can
retain coverage in retirement or if they change employers
by paying the entire premium directly to the insurer.
According to the U.S. Bureau of Labor Statistics, 14
percent of all workers in private industry had access to
long-term care insurance at work in 2009.
accelerateD benefits
To help pay long-term care costs, certain life insurance
policies allow the policyholder to access benefits prior
to death. Circumstances that can trigger these accelerated
benefits include diagnosis of a terminal illness or a
medical condition that would drastically shorten the
policyholder’s life span, the need for long-term care, or
permanent confinement in a nursing home. Accelerated
benefit provisions may be integrated in the policy or
more typically attached as a rider.
10The life insurance industry is integral to the economies
of all 50 states and the District of Columbia. In 2009,
927 life insurers were domiciled in the United States,
and another 19 were domiciled in U.S. territories (Table
10.1). The companies’ investments contribute to state
economies as Americans and their families achieve
financial security through life insurance products.
Billions of dollars of life insurance coverage is purchased
in each state every year. Californians bought the most
in 2009, $350 billion worth, while Vermont residents
acquired $4 billion (Table 10.2). Total life insurance in
force ranged from $3 trillion in California to $36 billion
in Wyoming (Table 10.3).
Payments from life insurers are a mainstay of financial
security for residents in every state. Death payments
under life insurance policies were greatest in California
($6.9 billion) and Texas ($5.2 billion) during 2009
(Table 10.4). Life insurance beneficiaries in 10 other
states received payments totaling over $2 billion, and
14 states had death payments between $1 billion and $2
billion. Table 10.5 breaks down death payments among
individual, group, and credit policies.
Annuity payments are another source of financial security
provided by life insurers nationwide. In 2009, payments
from annuities totaled $7.9 billion in California followed
by $5.7 billion in New York (Table 10.4). Residents of
24 other states received annuity payments totaling more
than $1 billion.
Table 10.6 reports the distribution of premium receipts by
state in 2009 across the various product lines offered by
life insurers—life insurance, annuities, health insurance,
and deposit-type funds. The greatest premium amounts
for life insurance, health insurance, and annuities were
collected in California ($58 billion) and New York ($44
billion).
Life insurers are a significant source of investment
capital in each state, particularly through real estate
loans. U.S. life insurers held $325 billion in domestic
mortgages in 2009. Mortgage holdings ranged from
$102 million in Alaska to $67 billion in California (Table
10.7). Life insurers also directly own real estate across
the country—$27 billion worth in 2009 (Table 10.8).
California and Texas had the most real estate owned
by life insurers, with $4.2 billion and $2.5 billion,
respectively.
INTHESTATES
86 American Council of Life Insurers
Table 10.1LifeInsurers,byStateofDomicile,2009
Alabama 10 Nebraska 33Alaska - Nevada 1Arizona 42 New Hampshire 1Arkansas 28 New Jersey 6California 18 New Mexico 1Colorado 9 New York 88Connecticut 26 North Carolina 2Delaware 24 North Dakota 3District of Columbia 3 Ohio 43Florida 12 Oklahoma 23Georgia 15 Oregon 2Hawaii 4 Pennsylvania 42Idaho 1 Rhode Island 3Illinois 64 South Carolina 14Indiana 28 South Dakota 1Iowa 26 Tennessee 12Kansas 10 Texas 127Kentucky 7 Utah 14Louisiana 32 Vermont 3Maine 2 Virginia 5Maryland 4 Washington 10Massachusetts 18 West Virginia - Michigan 28 Wisconsin 27Minnesota 15 Wyoming - Mississippi 12 Missouri 26Montana 2 Total U.S. 927
Guam 4
Puerto Rico 15
Aggregate total 946
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.
87In the States
Table 10.2LifeInsurancePurchases,byState,2009(millions)
Individual Group Credit Total
Alabama $25,487 $13,267 $1,245 $40,000Alaska 3,004 2,901 92 5,998Arizona 29,313 18,445 315 48,072Arkansas 11,320 9,098 507 20,925California 212,738 134,477 2,344 349,558Colorado 32,128 22,698 288 55,114Connecticut 29,903 22,584 305 52,792Delaware 7,256 2,987 109 10,351District of Columbia 4,796 6,831 129 11,756Florida 100,269 58,378 2,754 161,401Georgia 57,264 42,064 3,847 103,174Hawaii 7,210 1,656 382 9,248Idaho 8,592 3,276 238 12,106Illinois 76,682 61,017 1,793 139,493Indiana 26,757 28,978 766 56,501Iowa 17,722 10,340 790 28,852Kansas 15,805 8,828 501 25,135Kentucky 15,365 10,762 1,481 27,608Louisiana 26,746 16,244 3,150 46,141Maine 4,240 3,079 504 7,823Maryland 34,264 19,193 759 54,216Massachusetts 43,043 31,461 449 74,953Michigan 39,088 33,520 1,519 74,127Minnesota 34,004 24,530 713 59,247Mississippi 14,494 12,129 1,084 27,707Missouri 29,879 27,014 1,014 57,906Montana 4,071 1,166 179 5,416Nebraska 12,204 5,552 684 18,440Nevada 13,527 6,940 232 20,699New Hampshire 6,461 3,829 430 10,721New Jersey 69,292 40,749 530 110,570New Mexico 6,625 4,887 568 12,080New York 136,304 75,356 2,186 213,846North Carolina 48,568 67,853 3,601 120,023North Dakota 3,557 1,354 292 5,203Ohio 48,845 36,780 1,312 86,937Oklahoma 15,346 9,306 781 25,433Oregon 16,146 9,200 430 25,775Pennsylvania 60,821 50,817 4,508 116,146Rhode Island 5,054 17,009 49 22,112South Carolina 22,353 15,630 2,056 40,039South Dakota 5,905 1,649 202 7,757Tennessee 32,883 28,452 1,994 63,329Texas 128,554 90,167 7,320 226,041Utah 21,137 12,345 867 34,349Vermont 2,256 1,208 192 3,655Virginia 41,844 32,336 1,509 75,689Washington 31,688 14,796 420 46,904West Virginia 4,593 3,124 488 8,205Wisconsin 28,263 20,276 969 49,508Wyoming 2,933 1,286 153 4,372Total U.S. 1,676,600 1,177,824 59,028 2,913,451
Other1 59,898 14,311 9,073 83,282
Aggregate total 1,736,498 1,192,135 68,100 2,996,733
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent direct business of US life insurers and fraternal benefit societies.1Includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, Canada, N. Mariana Islands and other aggregates.
88 American Council of Life Insurers
Table 10.3LifeInsuranceinForce,byState,2009
Thousandsofpolicies/Millionsofdollars
Individual Group1 Credit Total
Policies Faceamount Faceamount Policies2 Faceamount Faceamount
Alabama 5,481 $234,422 $111,722 342 $1,739 $347,883Alaska 177 33,927 17,607 47 325 51,859Arizona 1,764 276,539 137,482 153 1,338 415,359Arkansas 1,706 105,690 60,426 166 877 166,993California 10,246 2,054,873 958,029 654 2,585 3,015,487Colorado 1,908 308,660 156,350 178 1,017 466,027Connecticut 1,672 322,962 172,389 115 793 496,144Delaware 482 90,563 96,399 36 269 187,231District of Columbia 440 35,522 77,785 28 182 113,489Florida 7,473 946,789 546,385 847 5,390 1,498,564Georgia 5,347 536,022 333,465 1,008 3,593 873,081Hawaii 563 75,157 28,959 139 808 104,924Idaho 510 70,316 29,066 70 540 99,922Illinois 7,159 796,290 467,781 659 3,884 1,267,955Indiana 3,400 286,014 177,256 379 1,989 465,259Iowa 1,961 182,091 81,986 201 1,606 265,683Kansas 1,564 159,138 90,770 146 1,051 250,959Kentucky 2,401 162,398 109,150 437 1,770 273,319Louisiana 4,084 224,049 134,789 677 3,197 362,035Maine 527 54,043 45,176 98 793 100,013Maryland 3,646 359,261 213,842 302 1,661 574,763Massachusetts 2,777 470,636 316,595 183 1,170 788,401Michigan 4,407 436,064 323,358 474 3,195 762,618Minnesota 2,692 366,011 244,949 199 2,445 613,405Mississippi 2,061 123,469 65,972 360 1,878 191,319Missouri 3,249 298,714 208,302 327 2,064 509,080Montana 360 41,164 15,767 60 429 57,360
Continued
89In the States
Table 10.3LifeInsuranceinForce,byState,2009—Continued
Thousandsofpolicies/Millionsofdollars
Individual Group1 Credit Total
Policies Faceamount Faceamount Policies2 Faceamount Faceamount
Nebraska 1,118 117,258 58,854 170 933 177,046Nevada 664 116,245 53,536 131 561 170,342New Hampshire 576 78,554 40,437 104 872 119,862New Jersey 4,076 726,065 525,827 230 1,734 1,253,627New Mexico 650 67,732 65,908 158 1,215 134,855New York 8,384 1,312,596 651,671 814 5,246 1,969,512North Carolina 6,167 493,187 306,354 629 3,415 802,957North Dakota 400 38,211 13,527 64 600 52,338Ohio 6,502 562,420 360,424 443 3,494 926,338Oklahoma 1,545 141,683 80,018 223 1,682 223,383Oregon 1,133 166,208 116,980 167 1,102 284,290Pennsylvania 7,639 699,760 454,990 811 5,951 1,160,701Rhode Island 445 61,325 56,772 25 165 118,262South Carolina 3,292 207,130 100,636 787 2,231 309,997South Dakota 504 57,896 13,864 54 438 72,198Tennessee 4,000 316,730 216,750 508 3,053 536,533Texas 10,505 1,128,891 802,610 2,094 16,268 1,947,769Utah 785 160,722 71,135 253 1,468 233,325Vermont 295 29,875 17,218 43 315 47,409Virginia 4,344 438,513 419,109 443 2,937 860,559Washington 1,922 312,491 206,016 202 1,356 519,862West Virginia 993 51,293 89,553 108 761 141,607Wisconsin 3,175 314,898 168,761 324 2,188 485,847Wyoming 230 26,461 9,352 31 300 36,113Total U.S. 147,398 16,676,929 10,122,058 17,102 104,874 26,903,861
Other3 5,930 481,876 154,747 7,788 51,927 688,550
Aggregate total 153,329 17,158,805 10,276,805 24,890 156,801 27,592,411
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Credit category is limited to life insurance on loans of 10 years or less duration. Individual and group categories include credit life insurance on loans of more than 10 years duration. Data represent direct business of U.S. life insurers and fraternal benefit societies.1Omits policies due to double counting.2Includes group credit certificates.3 Includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, Canada, N. Mariana Islands and other aggregates.
90 American Council of Life Insurers
Table 10.4LifeInsuranceandAnnuityBenefitPayments,byState,2009(thousands)
Policyand contract Death Annuity Surrender Other dividends payments payments1 values payments2 Total
Alabama $206,525 $1,228,678 $1,045,111 $2,695,996 $33,671 $5,209,981Alaska 25,400 126,177 91,925 390,478 17,126 651,106Arizona 267,707 1,251,871 1,387,942 4,136,580 45,950 7,090,050Arkansas 110,754 593,587 388,466 1,200,188 60,230 2,353,225California 1,527,062 6,952,428 7,882,482 26,487,589 703,441 43,553,002Colorado 277,806 1,160,222 1,019,106 3,899,408 288,868 6,645,411Connecticut 388,158 1,167,116 2,279,530 12,538,359 30,963 16,404,127Delaware 62,193 497,256 2,514,790 6,205,706 1,063,232 10,343,178District of Columbia 53,877 362,494 170,140 1,020,004 155,082 1,761,597Florida 1,025,560 4,919,287 4,757,721 15,153,356 548,420 26,404,344Georgia 475,618 2,369,706 1,194,171 4,901,580 88,053 9,029,127Hawaii 89,680 297,966 359,553 1,295,664 7,149 2,050,012Idaho 78,848 295,810 325,785 820,915 36,791 1,558,149Illinois 1,094,875 3,320,204 3,315,214 9,608,495 298,178 17,636,966Indiana 420,684 1,595,057 1,343,389 4,157,081 44,356 7,560,566Iowa 342,296 915,842 831,496 2,457,833 2,017,626 6,565,093Kansas 203,948 707,171 565,468 2,161,624 53,100 3,691,312Kentucky 201,485 932,843 710,443 1,791,525 58,287 3,694,583Louisiana 213,126 1,116,436 716,183 2,470,166 71,708 4,587,619Maine 93,001 285,432 281,318 845,123 82,865 1,587,739Maryland 390,842 1,521,166 1,466,343 3,938,352 3,198,658 10,515,360Massachusetts 679,293 1,615,643 2,147,393 7,049,635 1,547,236 13,039,200Michigan 629,346 2,318,803 2,455,766 8,354,786 47,209 13,805,911Minnesota 459,129 1,472,652 1,255,300 4,708,540 34,225 7,929,846Mississippi 95,143 706,499 284,201 1,261,549 88,156 2,435,548Missouri 357,488 1,466,473 1,184,249 4,271,014 190,562 7,469,785Montana 60,091 173,197 190,376 450,649 4,975 879,288
Continued
91In the States
Table 10.4LifeInsuranceandAnnuityBenefitPayments,byState,2009(thousands)—Continued
Policyand contract Death Annuity Surrender Other dividends payments payments1 values payments2 Total
Nebraska 166,161 520,870 665,636 1,327,764 14,718 2,695,150Nevada 96,337 485,796 433,508 1,513,153 16,038 2,544,832New Hampshire 117,089 301,052 357,835 1,166,335 9,818 1,952,129New Jersey 833,148 2,763,816 2,568,969 11,045,893 586,419 17,798,246New Mexico 87,144 429,086 671,550 882,528 107,931 2,178,239New York 2,024,057 4,772,263 5,701,771 20,386,286 303,976 33,188,352North Carolina 598,089 2,260,582 1,471,308 6,892,630 793,672 12,016,280North Dakota 55,548 165,117 121,126 409,841 3,597 755,229Ohio 732,870 3,048,344 2,965,380 8,485,900 664,279 15,896,772Oklahoma 162,663 853,955 627,350 1,597,464 131,039 3,372,471Oregon 178,946 673,911 1,036,085 2,497,788 19,144 4,405,875Pennsylvania 1,080,906 3,452,171 3,503,612 10,929,248 505,249 19,471,186Rhode Island 84,128 323,464 348,366 790,626 10,309 1,556,893South Carolina 225,505 1,143,647 627,059 2,672,903 34,274 4,703,389South Dakota 69,203 226,162 168,095 531,696 3,639 998,795Tennessee 291,184 1,669,342 1,077,297 3,990,629 173,540 7,201,992Texas 893,974 5,210,502 4,058,269 13,187,008 220,190 23,569,942Utah 113,874 571,881 473,970 1,568,844 16,739 2,745,307Vermont 67,866 143,819 158,275 433,877 47,955 851,792Virginia 498,939 2,060,105 1,324,406 4,740,291 112,929 8,736,669Washington 327,775 1,137,650 1,698,454 4,486,648 34,417 7,684,944West Virginia 109,319 399,731 362,090 958,955 32,704 1,862,800Wisconsin 582,604 1,279,088 1,509,300 4,485,807 47,594 7,904,393Wyoming 32,066 123,507 90,478 294,338 2,313 542,701Total U.S. 19,259,332 73,385,878 72,184,047 239,548,648 14,708,600 419,086,505
Other3 992,183 1,664,532 1,867,489 11,935,324 2,889,868 19,349,395
Aggregate total 20,251,514 75,050,410 74,051,536 251,483,972 17,598,468 438,435,900
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data.Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts, as explained in numbered footnotes. Data represent direct business of U.S. life insurers and fraternal benefit societies.1Excludes payments from deposit-type contracts due to codification.2Includes matured endowments, disability payments, and payments on guaranteed interest contracts (GICs).3Includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, Canada, N. Mariana Islands and other aggregates.
92 American Council of Life Insurers
Table 10.5PaymentstoLifeInsuranceBeneficiaries,byState,2009(thousands)
Individual Group Credit Total
Alabama $830,148 $387,759 $10,771 $1,228,678Alaska 68,532 56,017 1,628 126,177Arizona 833,122 414,344 4,405 1,251,871Arkansas 373,433 213,824 6,330 593,587California 4,960,498 1,980,361 11,569 6,952,428Colorada 786,650 369,294 4,277 1,160,222Connecticut 838,067 326,392 2,656 1,167,116Delaware 312,811 182,933 1,512 497,256District of Columbia 88,505 273,394 594 362,494Florida 3,551,463 1,336,319 31,505 4,919,287Georgia 1,535,851 812,659 21,195 2,369,706Hawaii 197,759 97,593 2,614 297,966Idaho 202,239 90,886 2,686 295,810Illinois 2,257,001 1,047,676 15,527 3,320,204Indiana 1,016,563 566,587 11,907 1,595,057Iowa 684,220 224,040 7,581 915,842Kansas 477,884 223,678 5,608 707,171Kentucky 610,509 311,474 10,860 932,843Louisiana 754,596 347,889 13,951 1,116,436Maine 156,065 125,882 3,485 285,432Maryland 926,183 587,167 7,817 1,521,166Massachusetts 1,082,539 529,716 3,388 1,615,643Michigan 1,365,974 933,165 19,664 2,318,803Minnesota 1,091,260 372,545 8,847 1,472,652Mississippi 485,420 213,015 8,064 706,499Missouri 929,390 523,296 13,788 1,466,473Montana 116,669 54,462 2,066 173,197
Continued
93In the States
Table 10.5PaymentstoLifeInsuranceBeneficiaries,byState,2009(thousands)—Continued
Individual Group Credit Total
Nebraska 398,474 118,870 3,526 520,870Nevada 325,471 158,019 2,306 485,796New Hampshire 208,286 90,456 2,311 301,052New Jersey 1,796,028 962,209 5,578 2,763,816New Mexico 250,135 173,977 4,974 429,086New York 3,401,269 1,346,438 24,556 4,772,263North Carolina 1,546,010 692,493 22,079 2,260,582North Dakota 114,340 48,228 2,550 165,117Ohio 2,089,326 938,273 20,745 3,048,344Oklahoma 541,808 303,349 8,798 853,955Oregon 464,011 203,056 6,844 673,911Pennsylvania 2,358,869 1,062,158 31,144 3,452,171Rhode Island 238,815 83,886 762 323,464South Carolina 754,370 375,418 13,858 1,143,647South Dakota 184,068 40,014 2,080 226,162Tennessee 1,070,815 580,414 18,113 1,669,342Texas 3,346,514 1,817,751 46,237 5,210,502Utah 383,463 184,014 4,404 571,881Vermont 98,310 44,147 1,362 143,819Virginia 1,127,984 917,149 14,972 2,060,105Washington 707,421 422,792 7,438 1,137,650West Virginia 234,344 159,710 5,677 399,731Wisconsin 898,974 370,116 9,998 1,279,088Wyoming 84,209 37,764 1,534 123,507Total U.S. 49,156,667 23,733,068 496,143 73,385,878
Other1 1,280,018 231,704 152,810 1,664,532
Aggregate total 50,436,686 23,964,772 648,953 75,050,410
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent direct business of U.S. life insurers and fraternal benefit societies.1Includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, Canada, N. Mariana Islands and other aggregates.
94 American Council of Life Insurers
Table 10.6DirectPremiumReceiptsofLifeInsurers,byState,2009(millions)
Life Annuity Health Deposit-type funds1 Total
Alabama $1,887 $3,276 $1,556 $228 $6,947Alaska 303 575 285 33 1,196Arizona 1,911 5,862 3,459 224 11,455Arkansas 932 1,776 1,460 89 4,256California 13,232 31,937 12,649 2,036 59,853Colorado 1,973 5,304 3,141 728 11,147Connecticut 2,346 6,543 2,228 10,520 21,637Delaware 856 1,612 430 26,787 29,685District of Columbia 378 1,432 581 168 2,560Florida 7,384 20,461 10,888 1,043 39,777Georgia 4,022 5,946 5,045 615 15,628Hawaii 616 1,665 633 58 2,972Idaho 469 1,131 589 257 2,446Illinois 6,037 12,770 6,711 1,127 26,646Indiana 2,422 5,674 4,134 544 12,774Iowa 1,510 3,430 1,602 2,096 8,638Kansas 1,229 2,535 3,112 2,320 9,197Kentucky 1,407 2,977 2,125 169 6,678Louisiana 1,968 4,001 1,890 173 8,032Maine 451 1,184 873 195 2,703Maryland 2,542 6,465 2,614 744 12,366Massachusetts 3,126 9,147 2,650 627 15,550Michigan 3,761 11,601 4,081 861 20,305Minnesota 3,117 8,134 2,045 549 13,845Mississippi 1,088 1,521 1,672 99 4,380Missouri 2,574 6,320 5,327 530 14,751Montana 305 608 519 32 1,464Nebraska 939 1,934 1,244 487 4,604Nevada 812 1,702 1,146 245 3,906New Hampshire 533 1,739 644 1,800 4,717New Jersey 5,656 13,052 4,503 1,730 24,941New Mexico 572 1,213 795 77 2,656New York 10,348 26,673 7,010 25,826 69,857North Carolina 4,040 9,187 5,217 2,960 21,404North Dakota 321 667 329 28 1,345Ohio 4,636 12,203 7,111 1,710 25,660Oklahoma 1,221 2,304 1,777 189 5,490Oregon 1,073 3,386 1,611 212 6,283Pennsylvania 5,772 15,723 5,572 1,240 28,308Rhode Island 447 1,176 513 107 2,244South Carolina 1,730 3,445 2,191 180 7,546South Dakota 551 634 404 49 1,639Tennessee 2,634 5,108 3,110 490 11,342Texas 8,875 17,929 13,906 1,111 41,821Utah 1,022 2,147 1,123 143 4,435Vermont 228 636 374 41 1,279Virginia 3,594 6,911 4,077 646 15,228Washington 1,929 5,491 2,549 299 10,268West Virginia 598 1,331 825 94 2,848Wisconsin 2,443 6,517 4,946 637 14,543Wyoming 232 395 320 29 976Total U.S. 128,052 305,393 153,597 93,182 680,224 Other2 9,335 3,173 17,132 237 29,877 Aggregate total 137,387 308,566 170,729 93,419 710,101
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Codification effective with 2001 Annual Statement filings changed the reporting of certain lines of business, particularly deposit-type contracts. Data represent direct business of U.S. life insurers and fraternal benefit societies.1Includes guaranteed interest contracts, supplemental contracts and annuities certain, dividend accumulations or refunds, and other deposit funds.2Includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands, Canada, N. Mariana Islands and other aggregates.
95In the States
Table 10.7MortgagesOwnedbyLifeInsurers,byTypeandState,2009(thousands)
Farm Non-farm Total
Alabama $481,767 $1,407,261 $1,889,028Alaska 5,960 95,958 101,918Arizona 126,621 7,283,373 7,409,994Arkansas 691,185 304,087 995,272California 4,496,390 62,605,403 67,101,793Colorado 120,692 6,599,462 6,720,154Connecticut 4,563 2,489,947 2,494,511Delaware 15,537 935,646 951,183District of Columbia - 6,267,718 6,267,718Florida 1,182,682 19,158,253 20,340,935Georgia 242,717 11,628,818 11,871,535Hawaii 3,932 1,263,749 1,267,682Idaho 762,785 661,907 1,424,692Illinois 701,036 13,739,168 14,440,205Indiana 447,810 3,270,055 3,717,865Iowa 618,641 1,055,501 1,674,143Kansas 147,741 1,674,242 1,821,983Kentucky 74,197 1,871,051 1,945,248Louisiana 232,868 872,221 1,105,089Maine 257,733 536,285 794,018Maryland 10,061 9,617,838 9,627,899Massachusetts - 8,178,660 8,178,660Michigan 91,759 4,748,537 4,840,295Minnesota 349,547 6,091,363 6,440,910Mississippi 739,047 576,222 1,315,269Missouri 242,681 3,651,420 3,894,101Montana 331,759 182,896 514,655Nebraska 449,081 1,534,785 1,983,866Nevada 29,579 3,539,396 3,568,975New Hampshire 59,527 624,257 683,784New Jersey 83,656 14,751,730 14,835,386New Mexico 118,227 942,332 1,060,559New York 75,281 21,182,450 21,257,731North Carolina 127,560 6,666,796 6,794,356North Dakota 37,383 166,741 204,124Ohio 257,316 7,540,900 7,798,215Oklahoma 249,455 977,822 1,227,276Oregon 523,281 5,077,421 5,600,702Pennsylvania 127,372 8,885,478 9,012,850Rhode Island - 447,451 447,451South Carolina 189,357 2,110,001 2,299,359South Dakota 251,034 148,620 399,654Tennessee 113,595 4,073,020 4,186,615Texas 473,024 25,324,760 25,797,785Utah 35,842 3,303,235 3,339,078Vermont - 114,162 114,162Virginia 97,466 10,451,558 10,549,024Washington 1,192,351 10,553,379 11,745,729West Virginia 142,811 157,589 300,400Wisconsin 216,320 2,282,964 2,499,284Wyoming 139,801 46,793 186,594Total U.S. 17,369,030 307,670,682 325,039,713
Other1 391,753 10,884,151 11,275,904
Aggregate total 17,760,783 318,554,834 336,315,617
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.1Includes U.S. territories and possessions, various, and multistate categories and foreign countries.
96 American Council of Life Insurers
Table 10.8RealEstateOwnedbyLifeInsurers,byState,2009(thousands)
Alabama $219,236 Nebraska $261,945Alaska 16,672 Nevada 236,367Arizona 919,225 New Hampshire 57,298Arkansas 21,198 New Jersey 882,521California 4,165,097 New Mexico 9,488Colorado 530,933 New York 996,093Connecticut 921,028 North Carolina 522,351Delaware 29,581 North Dakota 52,314District of Columbia 1,060,864 Ohio 302,488Florida 1,993,330 Oklahoma 53,889Georgia 1,084,826 Oregon 236,927Hawaii 67,524 Pennsylvania 431,609Idaho 22,155 Rhode Island 67,504Illinois 1,547,957 South Carolina 84,344Indiana 224,410 South Dakota 20,144Iowa 444,007 Tennessee 433,947Kansas 159,514 Texas 2,520,241Kentucky 62,506 Utah 48,393Louisiana 134,956 Vermont 43,330Maine 80,607 Virginia 1,086,293Maryland 141,300 Washington 1,452,305Massachusetts 1,523,892 West Virginia 2,396Michigan 259,578 Wisconsin 490,551Minnesota 690,876 Wyoming 14,142Mississippi 83,955 Missouri 111,386 Total U.S. 26,823,492Montana - Other1 890,610 Aggregate total 27,714,102
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Data represent U.S. life insurers and fraternal benefit societies.1Includes U.S. territories and possessions, various, and multistate categories and foreign countries.
11The U.S. life insurance industry is made up of almost a
thousand companies with sales and operations across
the country. Many of these companies are stand-alone
entities, with no life insurer affiliate or subsidiary
operating in the United States. Others are organized into
groups or fleets of affiliates and subsidiaries. This chapter
presents rankings of the 25 largest life insurance groups
(counting stand-alone companies as a group of one)
based on assets, premiums and annuity considerations,
and life insurance coverage.
INDUSTRYRANKINGS
98 American Council of Life Insurers
Table 11.1LargestLifeInsurers,byTotalAssets,2009(thousands)
MetLife, Inc. $436,251,736
Prudential Financial 366,937,506
American International Group 312,843,868
Hartford Life, Inc. 219,495,435
Manulife Financial 217,242,055
TIAA-CREF 204,694,966
New York Life 201,809,229
AEGON USA, Inc. 179,855,819
ING North America 178,863,036
Northwestern Mutual 167,203,452
Lincoln Financial 153,758,885
AXA Financial 142,447,580
Massachusetts Mutual 132,969,358
Principal Financial 118,798,952
Pacific Life 97,906,637
Nationwide 94,044,555
RiverSource Insurance 86,077,178
Jackson National 81,377,616
Allianz 76,534,675
AFLAC 76,043,956
Allstate 74,067,262
Genworth Financial 66,866,587
Sun Life Assurance 60,784,728
Thrivent Financial For Lutherans 57,407,141
State Farm 49,752,472
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
99Industry Rankings
Table 11.2LargestLifeInsurers,byGeneralAccountAssets,2009(thousands)
MetLife, Inc. $288,042,363
American International Group 244,105,666
TIAA-CREF 194,653,268
Prudential Financial 179,457,528
New York Life 176,566,255
Northwestern Mutual 150,859,453
AEGON USA, Inc. 108,676,937
Manulife Financial 93,911,435
Massachusetts Mutual 89,327,522
ING North America 85,192,088
Lincoln Financial 78,416,813
AFLAC 75,843,776
Allstate 64,710,783
Principal Financial 60,748,838
Allianz 60,083,491
Hartford Life, Inc. 56,344,434
AXA Financial 55,125,541
Genworth Financial 55,078,027
State Farm 48,510,328
Jackson National 48,048,205
Pacific Life 45,225,866
Thrivent Financial For Lutherans 45,124,694
Aviva Group 40,480,414
Guardian 35,732,832
Sammons Financial 35,292,486
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
100 American Council of Life Insurers
Table 11.3LargestLifeInsurers,bySeparateAccountAssets,2009(thousands)
Prudential Financial $187,479,978
Hartford Life, Inc. 163,151,001
MetLife, Inc. 148,209,373
Manulife Financial 123,330,620
ING North America 93,670,948
AXA Financial 87,322,039
Lincoln Financial 75,342,072
AEGON USA, Inc. 71,178,882
American International Group 68,738,202
Nationwide 59,208,088
Principal Financial 58,050,113
RiverSource Insurance 54,524,589
Pacific Life 52,680,771
Massachusetts Mutual 43,641,836
Jackson National 33,329,412
Sun Life Assurance 29,719,925
New York Life 25,242,974
Great West 19,267,376
Allianz 16,451,184
Northwestern Mutual 16,343,999
Fidelity Investments 15,126,558
Kemper Investors 13,113,608
Thrivent Financial For Lutherans 12,282,446
Minnesota Mutual 12,082,732
Genworth Financial 11,788,559
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
101Industry Rankings
Table 11.4LargestLifeInsurers,byIndividualNetLifeInsurancePremiums,2009(thousands)
Northwestern Mutual $10,425,806
New York Life 7,081,620
American International Group 6,307,142
MetLife, Inc. 4,284,027
Massachusetts Mutual 3,979,589
Prudential Financial 3,851,750
State Farm 3,684,878
Guardian 2,975,669
AXA Financial 2,873,285
Berkshire Hathaway 2,845,238
AEGON USA, Inc. 2,838,496
Manulife Financial 2,406,275
Lincoln Financial 2,337,316
AFLAC 1,891,797
RGA Group 1,663,217
Allstate 1,651,055
Goldman Sachs Group 1,403,629
Thrivent Financial For Lutherans 1,336,895
Primerica 1,281,450
Pacific Life 1,278,226
Torchmark 1,181,000
Principal Financial 1,112,019
Nationwide 1,098,073
Great West 1,045,561
Hartford Life, Inc. 991,310
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance.
102 American Council of Life Insurers
Table 11.5LargestLifeInsurers,byGroupNetLifeInsurancePremiums,2009(thousands)
MetLife, Inc. $5,325,477
Prudential Financial 3,657,584
New York Life 1,632,116
Minnesota Mutual 1,458,285
CIGNA 1,454,664
StanCorp Financial 736,862
Hartford Life, Inc. 704,662
UnumProvident 686,845
ING North America 575,375
Aetna 568,089
Lincoln Financial 532,733
HCSC 511,431
Sun Life Assurance 498,068
Assurant, Inc. 414,210
American International Group 414,037
Reliance Standard 377,772
AEGON USA, Inc. 339,810
Homesteaders Life Company 339,604
Principal Financial 335,244
Forethought Financial 313,647
Guardian 296,203
Torchmark 293,793
Nationwide 292,702
Wellpoint, Inc. 288,131
Mutual of Omaha 287,870
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance.
103Industry Rankings
Table 11.6LargestLifeInsurers,byTotalNetLifeInsurancePremiums,2009(thousands)
Northwestern Mutual $10,425,806
MetLife, Inc. 9,610,453
New York Life 8,713,736
Prudential Financial 7,509,329
American International Group 6,861,273
Massachusetts Mutual 4,083,229
State Farm 3,749,103
Guardian 3,271,872
AEGON USA, Inc. 3,210,975
AXA Financial 2,882,071
Lincoln Financial 2,870,050
Berkshire Hathaway 2,865,988
Manulife Financial 2,453,499
Minnesota Mutual 2,233,053
AFLAC 1,894,900
Hartford Life, Inc. 1,695,973
Allstate 1,691,342
RGA Group 1,689,628
CIGNA 1,546,610
Torchmark 1,474,793
Principal Financial 1,447,263
Goldman Sachs Group 1,404,030
Sun Life Assurance 1,399,016
Nationwide 1,390,774
Primerica 1,380,861
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance.
104 American Council of Life Insurers
Table 11.7LargestLifeInsurers,byIndividualDirectLifeInsurancePremiums,2009(thousands)
Northwestern Mutual $11,191,070
American International Group 8,609,033
MetLife, Inc. 7,605,775
New York Life 7,595,914
Prudential Financial 6,158,388
Manulife Financial 5,961,488
Lincoln Financial 4,564,783
Massachusetts Mutual 4,478,301
AEGON USA, Inc. 3,889,352
State Farm 3,685,820
AXA Financial 3,379,320
Guardian 3,165,308
Pacific Life 2,301,405
Protective Life 2,238,356
Allstate 2,235,602
ING North America 2,172,058
AFLAC 1,904,223
Primerica 1,881,141
Genworth Financial 1,773,176
Hartford Life, Inc. 1,685,156
Sun Life Assurance 1,512,944
Thrivent Financial For Lutherans 1,405,481
Torchmark 1,371,031
Principal Financial 1,361,324
Nationwide 1,270,056
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
105Industry Rankings
Table 11.8LargestLifeInsurers,byGroupDirectLifeInsurancePremiums,2009(thousands)
MetLife, Inc. $7,949,200
Prudential Financial 4,399,043
Hartford Life, Inc. 1,532,196
New York Life 1,362,170
CIGNA 1,251,805
Minnesota Mutual 1,242,460
UnumProvident 1,093,021
Aetna 1,000,078
StanCorp Financial 739,540
ING North America 579,988
Lincoln Financial 531,662
Sun Life Assurance 501,168
American International Group 499,793
Assurant, Inc. 420,436
Reliance Standard 412,119
HCSC 381,322
Homesteaders Life Company 342,697
Principal Financial 337,787
AEGON USA, Inc. 335,049
Torchmark 314,787
Forethought Financial 312,413
Nationwide 307,068
Wellpoint, Inc. 297,805
Guardian 297,513
Mutual of Omaha 286,836
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
106 American Council of Life Insurers
Table 11.9LargestLifeInsurers,byTotalDirectLifeInsurancePremiums,2009(thousands)
MetLife, Inc. $15,556,382
Northwestern Mutual 11,191,070
Prudential Financial 10,557,425
American International Group 9,373,976
New York Life 8,958,084
Manulife Financial 5,993,343
Lincoln Financial 5,096,445
Massachusetts Mutual 4,638,813
AEGON USA, Inc. 4,259,336
State Farm 3,750,045
Guardian 3,462,822
AXA Financial 3,388,201
Hartford Life, Inc. 3,217,352
ING North America 2,752,046
Allstate 2,335,265
Pacific Life 2,301,405
Protective Life 2,269,693
Minnesota Mutual 2,114,444
Sun Life Assurance 2,014,112
Primerica 1,975,193
AFLAC 1,907,360
Genworth Financial 1,793,239
Principal Financial 1,699,111
Torchmark 1,685,818
UnumProvident 1,654,783
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
107Industry Rankings
Table 11.10LargestLifeInsurers,byIndividualLifeInsuranceIssued,2009(thousands)
Northwestern Mutual $113,132,701
ING North America 104,212,272
Prudential Financial 94,424,971
MetLife, Inc. 88,874,072
State Farm 86,304,297
New York Life 85,609,841
American International Group 73,396,682
Primerica 71,747,019
AEGON USA, Inc. 64,474,144
Manulife Financial 64,144,316
Lincoln Financial 50,833,555
Allstate 48,063,977
AXA Financial 47,751,129
Protective Life 45,521,378
Legal & General 39,838,996
Genworth Financial 37,507,627
Massachusetts Mutual 37,498,047
USAA 34,091,583
Guardian 28,569,557
Kemper Investors 26,075,725
AFLAC 26,026,324
Torchmark 24,011,035
Hartford Life, Inc. 21,467,499
Pacific Life 18,765,219
Ohio National 17,680,642
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
108 American Council of Life Insurers
Table 11.11LargestLifeInsurers,byGroupLifeInsuranceIssued,2009(thousands)
MetLife, Inc. $175,246,802
Prudential Financial 110,695,401
Aetna 87,033,186
Hartford Life, Inc. 85,252,612
UnumProvident 77,858,232
Minnesota Mutual 76,698,006
CIGNA 74,441,041
UnitedHealth 54,851,324
Lincoln Financial 52,607,600
Sun Life Assurance 45,941,569
StanCorp Financial 44,517,614
Reliance Standard 30,115,639
ING North America 26,262,991
Mutual of Omaha 23,457,753
Torchmark 21,443,103
New York Life 19,896,391
Guardian 14,534,953
American International Group 13,321,563
Principal Financial 12,895,399
HCSC 12,742,190
Assurant, Inc. 10,370,281
Liberty Mutual 9,570,609
Wellpoint, Inc. 8,031,638
OneAmerica Financial 6,330,041
Arkansas Blue Cross & Blue Shield 5,424,331
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
109Industry Rankings
Table 11.12LargestLifeInsurers,byTotalLifeInsuranceIssued,2009(thousands)
MetLife, Inc. $264,098,764
Prudential Financial 205,122,357
ING North America 130,475,263
Northwestern Mutual 113,132,701
Hartford Life, Inc. 106,720,111
New York Life 105,506,232
Lincoln Financial 103,441,155
Minnesota Mutual 97,045,284
American International Group 91,130,128
UnumProvident 91,036,054
Aetna 87,089,368
State Farm 86,397,276
Primerica 78,629,660
CIGNA 74,678,829
AEGON USA, Inc. 71,281,137
Manulife Financial 64,144,316
UnitedHealth 55,024,158
Sun Life Assurance 52,949,590
Protective Life 51,997,691
Allstate 49,156,679
AXA Financial 47,753,728
Torchmark 45,454,138
StanCorp Financial 44,532,040
Guardian 43,104,510
Legal & General 39,846,975
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009.
110 American Council of Life Insurers
Table 11.13LargestLifeInsurers,byIndividualLifeInsuranceinForce,2009(thousands)
Northwestern Mutual $700,846,055
State Farm 693,822,214
RGA Group 559,606,401
New York Life 497,706,578
Berkshire Hathaway 492,951,560
Swiss Re America 438,500,203
American International Group 410,003,503
AEGON USA, Inc. 387,999,277
MetLife, Inc. 342,692,904
AXA Financial 317,080,829
Munich American Holding 294,957,479
Prudential Financial 286,617,896
Protective Life 227,975,739
Genworth Financial 211,792,142
Allstate 199,593,203
Manulife Financial 169,620,858
Lincoln Financial 169,496,331
Primerica 166,782,864
Guardian 149,622,180
Massachusetts Mutual 149,516,947
Hartford Life, Inc. 135,311,226
Thrivent Financial For Lutherans 133,794,184
AFLAC 123,482,696
Generali Group 121,956,831
GE Financial 117,937,917
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude reinsurance ceded.
111Industry Rankings
Table 11.14LargestLifeInsurers,byGroupLifeInsuranceinForce,2009(thousands)
Prudential Financial $1,649,196,110
MetLife, Inc. 1,539,852,879
Minnesota Mutual 442,162,017
CIGNA 420,468,223
New York Life 317,162,356
StanCorp Financial 299,542,921
Sun Life Assurance 264,617,336
UnumProvident 255,406,250
Lincoln Financial 242,336,564
Aetna 235,672,154
Hartford Life, Inc. 179,937,046
American International Group 161,586,565
HCSC 161,328,328
UnitedHealth 160,429,053
Guardian 118,236,402
Mutual of Omaha 117,429,579
Principal Financial 109,772,227
Wellpoint, Inc. 83,933,907
Liberty Mutual 78,806,106
Assurant, Inc. 73,271,098
ING North America 64,898,557
Reliance Standard 36,434,103
Massachusetts Mutual 34,896,386
5 Star Life Insurance Company 34,139,539
Great West 33,594,814
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude reinsurance ceded.
112 American Council of Life Insurers
Table 11.15LargestLifeInsurers,byTotalLifeInsuranceinForce,2009(thousands)
Prudential Financial $1,935,817,805
MetLife, Inc. 1,882,623,204
New York Life 814,868,934
State Farm 707,324,845
Northwestern Mutual 701,947,055
American International Group 602,835,689
RGA Group 576,106,952
Berkshire Hathaway 499,934,419
Minnesota Mutual 495,672,054
Swiss Re America 451,633,727
CIGNA 440,782,491
AEGON USA, Inc. 423,798,727
Lincoln Financial 411,832,895
AXA Financial 319,124,644
Munich American Holding 317,944,217
Hartford Life, Inc. 315,248,272
UnumProvident 304,280,505
StanCorp Financial 299,578,635
Sun Life Assurance 289,141,109
Guardian 267,858,597
Aetna 236,061,003
Protective Life 229,470,545
Genworth Financial 213,117,717
Allstate 204,229,922
Mutual of Omaha 192,071,468
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude reinsurance ceded.
113Industry Rankings
Table 11.16LargestLifeInsurers,byIndividualNetAnnuityConsiderations,2009(thousands)
MetLife, Inc. $19,968,514
American International Group 12,930,960
Jackson National 12,288,440
New York Life 10,960,954
Lincoln Financial 10,595,267
RiverSource Insurance 8,989,547
Allianz 8,465,485
Prudential Financial 7,871,578
Pacific Life 6,952,447
TIAA-CREF 6,210,044
ING North America 5,037,779
Nationwide 4,801,521
AEGON USA, Inc. 4,610,016
Manulife Financial 3,544,899
AXA Financial 3,202,384
Massachusetts Mutual 3,027,537
American Equity Investment Group 2,852,666
Ohio National 2,544,705
Thrivent Financial For Lutherans 2,507,961
Western and Southern Financial 2,434,299
Symetra Financial 2,433,783
Sammons Financial 2,360,904
Principal Financial 1,996,163
Protective Life 1,833,312
USAA 1,785,709
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance and exclude deposit-type funds and supplementary contracts.
114 American Council of Life Insurers
Table 11.17LargestLifeInsurers,byGroupNetAnnuityConsiderations,2009(thousands)
Prudential Financial $17,639,929
ING North America 10,607,059
MetLife, Inc. 8,631,666
Manulife Financial 7,142,607
AEGON USA, Inc. 6,207,747
Massachusetts Mutual 5,725,988
Great West 5,046,767
AXA Financial 4,831,484
American International Group 3,936,795
Hartford Life, Inc. 3,817,186
TIAA-CREF 3,387,294
Sun Life Assurance 3,086,245
New York Life 3,061,206
Nationwide 2,984,925
Lincoln Financial 2,438,455
OneAmerica Financial 1,655,174
Jackson National 1,501,316
Minnesota Mutual 1,279,119
Pacific Life 1,153,366
Mutual of America Life Insurance Company 1,077,497
StanCorp Financial 998,485
American National 909,450
CUNA Mutual 761,634
UNIFI 670,134
Sammons Financial 527,107
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance and exclude deposit-type funds and supplementary contracts.
115Industry Rankings
Table 11.18LargestLifeInsurers,byTotalNetAnnuityConsiderations,2009(thousands)
MetLife, Inc. $28,600,180
Prudential Financial 25,511,507
American International Group 16,867,755
ING North America 15,644,838
New York Life 14,022,160
Jackson National 13,789,756
Lincoln Financial 13,033,721
AEGON USA, Inc. 10,817,763
Manulife Financial 10,687,506
TIAA-CREF 9,597,338
RiverSource Insurance 9,136,642
Massachusetts Mutual 8,753,525
Allianz 8,465,485
Pacific Life 8,105,813
AXA Financial 8,033,868
Nationwide 7,786,445
Great West 5,102,535
Sun Life Assurance 4,838,679
Sammons Financial 2,888,011
American Equity Investment Group 2,852,666
Ohio National 2,682,038
Thrivent Financial For Lutherans 2,507,961
Symetra Financial 2,491,215
Western and Southern Financial 2,448,929
American National 2,183,321
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Figures are net of reinsurance and exclude deposit-type funds and supplementary contracts.
116 American Council of Life Insurers
Table 11.19LargestLifeInsurers,byIndividualDirectAnnuityConsiderations,2009(thousands)
MetLife, Inc. $20,393,111
Jackson National 12,352,896
New York Life 10,960,954
Lincoln Financial 10,887,909
American International Group 10,648,728
RiverSource Insurance 8,989,546
Allianz 8,471,199
Manulife Financial 7,997,307
Prudential Financial 7,994,404
AEGON USA, Inc. 7,867,729
Pacific Life 7,249,916
TIAA-CREF 6,210,044
Aviva Group 5,682,791
ING North America 5,039,988
Nationwide 4,818,304
Hartford Life, Inc. 4,025,596
American Equity Investment Group 3,677,501
AXA Financial 3,215,370
Massachusetts Mutual 3,027,220
Sammons Financial 2,636,061
Ohio National 2,605,880
Thrivent Financial For Lutherans 2,507,961
Western and Southern Financial 2,435,504
Symetra Financial 2,434,657
Principal Financial 1,996,163
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
117Industry Rankings
Table 11.20LargestLifeInsurers,byGroupDirectAnnuityConsiderations,2009(thousands)
Prudential Financial $17,638,762
Manulife Financial 12,265,365
ING North America 10,611,410
MetLife, Inc. 8,656,012
AEGON USA, Inc. 6,225,857
Massachusetts Mutual 5,725,988
AXA Financial 5,144,189
Great West 5,021,798
American International Group 3,939,084
Hartford Life, Inc. 3,816,673
TIAA-CREF 3,387,294
Sun Life Assurance 3,089,246
New York Life 3,061,206
Nationwide 2,984,974
Lincoln Financial 2,437,439
OneAmerica Financial 1,636,050
Jackson National 1,501,316
Minnesota Mutual 1,277,830
Pacific Life 1,150,312
Mutual of America Life Insurance Company 1,077,497
StanCorp Financial 998,485
American National 909,450
CUNA Mutual 761,634
UNIFI 670,134
Sammons Financial 571,635
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
118 American Council of Life Insurers
Table 11.21LargestLifeInsurers,byTotalDirectAnnuityConsiderations,2009(thousands)
MetLife, Inc. $29,049,123
Prudential Financial 25,633,166
Manulife Financial 20,262,672
ING North America 15,651,398
American International Group 14,587,812
AEGON USA, Inc. 14,093,587
New York Life 14,022,160
Jackson National 13,854,211
Lincoln Financial 13,325,348
TIAA-CREF 9,597,338
RiverSource Insurance 9,134,513
Massachusetts Mutual 8,753,208
Allianz 8,471,199
Pacific Life 8,400,228
AXA Financial 8,359,559
Hartford Life, Inc. 7,842,269
Nationwide 7,803,279
Aviva Group 5,742,644
Great West 5,077,410
Sun Life Assurance 4,835,087
American Equity Investment Group 3,677,501
Sammons Financial 3,207,696
Ohio National 2,743,214
Thrivent Financial For Lutherans 2,507,961
Symetra Financial 2,492,089
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
119Industry Rankings
Table 11.22LargestLifeInsurers,byIndividualAnnuityReserves,2009(millions)
TIAA-CREF $147,291
American International Group 138,641
MetLife, Inc. 122,306
Hartford Life, Inc. 97,814
Lincoln Financial 83,776
RiverSource Insurance 66,389
Manulife Financial 65,139
Allianz 65,051
New York Life 57,724
Jackson National 57,059
Pacific Life 56,546
AEGON USA, Inc. 53,133
ING North America 44,432
Prudential Financial 39,222
Allstate 35,202
Nationwide 34,751
Genworth Financial 26,693
AXA Financial 25,455
Aviva Group 24,062
Thrivent Financial For Lutherans 23,400
Massachusetts Mutual 17,361
Western and Southern Financial 16,643
Principal Financial 16,450
Fidelity Investments 15,131
American Equity Investment Group 14,139
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
120 American Council of Life Insurers
Table 11.23LargestLifeInsurers,byGroupAnnuityReserves,2009(millions)
Prudential Financial $98,636
ING North America 86,001
MetLife, Inc. 82,831
Manulife Financial 68,692
AXA Financial 66,752
American International Group 49,314
AEGON USA, Inc. 35,342
Massachusetts Mutual 34,191
Hartford Life, Inc. 32,079
Nationwide 31,936
TIAA-CREF 23,227
Great West 21,503
New York Life 16,497
Lincoln Financial 15,309
Sun Life Assurance 14,866
Allstate 12,621
OneAmerica Financial 9,682
Minnesota Mutual 9,680
Principal Financial 7,069
Sammons Financial 6,685
Jackson National 5,979
StanCorp Financial 5,712
Aetna 4,709
Pacific Life 4,369
American National 3,999
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
121Industry Rankings
Table 11.24LargestLifeInsurers,byTotalAnnuityReserves,2009(millions)
MetLife, Inc. $205,137
American International Group 187,955
TIAA-CREF 170,518
Prudential Financial 137,858
Manulife Financial 133,831
ING North America 130,434
Hartford Life, Inc. 129,893
Lincoln Financial 99,085
AXA Financial 92,207
AEGON USA, Inc. 88,475
New York Life 74,221
RiverSource Insurance 68,583
Nationwide 66,687
Allianz 65,078
Jackson National 63,038
Pacific Life 60,915
Massachusetts Mutual 51,552
Allstate 47,823
Genworth Financial 28,719
Aviva Group 28,039
Sun Life Assurance 26,712
Great West 23,776
Principal Financial 23,519
Thrivent Financial For Lutherans 23,400
Sammons Financial 17,989
Source: ACLI tabulations of National Association of Insurance Commissioners (NAIC) data, used by permission.Notes: NAIC does not endorse any analysis or conclusions based on use of its data. Group totals represent a collection of life insurers based on organizational structure. Data are as of December 31, 2009. Amounts exclude deposit-type funds and supplementary contracts.
122 American Council of Life Insurers
12 MORTALITYANDLIFEEXPECTANCY
U.S. mortality rates and life expectancies have improved
dramatically over the long term. The aggregate, age-
adjusted death rate (per 1,000 population) has fallen
from 17.9 in 1940 to 7.6 in 2007 (Table 12.1). The death
rate among males dropped from 19.8 to 9.1 over this
period, and among females, from 16 to 6.4.
Life expectancy at age 25 is currently 51.8 years for
males and 56.3 years for females (Table 12.2). A man
who retired in 2007 at age 65 could expect to live 17.2
years more on average, while a 65-year-old woman could
expect to live another 19.9 years.
Examining trend data for life expectancy over the past
century yields startling contrasts. A 25-year-old during
1900–02 could expect to live 39.1 years more vs. 54.1
additional years for a 25-year-old in 2007.
Because of increased longevity, the last ten years
shown in Table 12.2 have been extended to include
life expectancy for men and women at age 100. This
is consistent with the 2001 Commissioners Standard
Ordinary (CSO) Mortality Table. The 2001 CSO mortality
table was introduced by the Society of Actuaries and
adopted by the National Association of Insurance
Commissioners for life insurers to use in underwriting
insurance (Table 12.3). It is the prevailing mortality table
and has been adopted by most states.
124 American Council of Life Insurers
Table 12.1DeathRatesintheUnitedStates
Age-adjustedrateper1,000population1
Year Male Female Total
1940 19.8 16.0 17.91950 16.7 12.4 14.51960 16.1 11.1 13.41970 15.4 9.7 12.21975 14.2 8.6 10.91980 13.5 8.2 10.41985 12.8 7.8 9.91986 12.6 7.8 9.81987 12.5 7.7 9.71988 12.5 7.8 9.81989 12.2 7.6 9.51990 12.0 7.5 9.41991 11.8 7.4 9.31992 11.6 7.3 9.11993 11.8 7.5 9.31994 11.6 7.5 9.21995 11.5 7.5 9.21996 11.2 7.4 9.01997 10.9 7.4 8.91998 10.6 7.3 8.81999 10.6 7.4 8.82000 10.5 7.3 8.72001 10.3 7.2 8.62002 10.1 7.2 8.52003 9.9 7.1 8.32004 9.6 6.8 8.02005 9.5 6.8 8.02006 9.2 6.6 7.82007 9.1 6.4 7.6
Source: U.S. Department of Health and Human Services’ National Center for Health Statistics, National Vital Statistics Reports.1Based on population estimates from the 2000 census, which were modified for consistency with Office of Management and Budget racial categories as of 1977. All death rates have been revised, and may differ from previously published rates that were based on 1990 population estimates.
125Mortality
Table 12.2LifeExpectancy,byAgeandGender,1900–2007
Age Male Female Total
1900–02 Newborn 47.9 50.7 49.2 1 54.4 56.1 55.2 5 54.2 55.8 55.0 15 46.1 47.6 46.8 25 38.4 39.9 39.1 35 31.2 32.7 31.9 45 24.1 25.4 24.8 55 17.4 18.4 17.9 65 11.5 12.2 11.9 75 6.8 7.3 7.1 85 3.8 4.1 4.0
Age Male Female Total
1909–11 Newborn 49.9 53.2 51.5 1 56.0 58.4 57.1 5 55.1 57.4 56.2 15 46.7 48.9 47.7 25 38.6 40.7 39.6 35 30.9 33.0 31.9 45 23.8 25.4 24.5 55 17.0 18.1 17.6 65 11.2 12.0 11.6 75 6.8 7.2 7.0 85 3.9 4.1 4.0
Age Male Female Total
1919–21 Newborn 55.5 57.4 56.4 1 59.5 60.5 59.9 5 57.6 58.4 58.0 15 49.1 49.7 49.4 25 41.1 41.9 41.5 35 33.4 34.4 33.9 45 25.8 26.7 26.3 55 18.5 19.3 18.9 65 12.2 12.7 12.5 75 7.3 7.7 7.5 85 4.1 4.3 4.2
Age Male Female Total
1929–31 Newborn 57.7 60.9 59.2 1 60.8 65.4 61.9 5 58.1 60.7 59.3 15 49.2 51.5 50.3 25 40.8 43.1 41.9 35 32.7 34.9 33.7 45 24.9 26.9 25.8 55 17.8 19.4 18.5 65 11.7 12.8 12.2 75 7.0 7.6 7.3 85 4.0 4.3 4.2
Continued
126 American Council of Life Insurers
Table 12.2LifeExpectancy,byAgeandGender,1900–2007—Continued
Age Male Female Total
1939–41 Newborn 61.6 65.9 63.6 1 64.0 67.7 65.8 5 60.8 64.4 62.5 15 51.4 55.0 53.1 25 42.5 45.9 44.1 35 33.8 37.0 35.3 45 25.5 28.5 26.9 55 18.2 20.5 19.3 65 12.1 13.6 12.8 75 7.2 8.0 7.6 85 4.1 4.5 4.3
Age Male Female Total
1949–51 Newborn 65.5 71.0 68.1 1 66.7 71.8 69.2 5 63.1 68.2 65.5 15 53.6 58.5 55.9 25 44.4 49.0 46.6 35 35.2 39.6 37.3 45 26.6 30.6 28.5 55 19.0 22.3 20.6 65 12.7 15.0 13.8 75 7.8 8.9 8.4 85 4.4 4.9 4.7
Age Male Female Total
1959–61 Newborn 66.8 73.2 69.9 1 67.8 73.9 70.8 5 64.1 70.2 67.0 15 54.4 60.5 57.3 25 45.2 50.8 47.9 35 35.9 41.3 38.5 45 27.1 32.1 29.5 55 19.3 23.5 21.4 65 13.0 15.8 14.4 75 8.0 9.3 8.7 85 4.4 4.7 4.6
Age Male Female Total
1969–71 Newborn 67.0 74.6 70.8 1 67.6 75.0 71.2 5 63.8 71.2 67.4 15 54.1 61.4 57.7 25 45.1 51.8 48.4 35 36.0 42.3 39.1 45 27.2 33.1 30.1 55 19.4 24.6 22.0 65 13.0 16.8 15.0 75 8.1 10.3 9.3 85 4.7 5.6 5.3
Continued
127Mortality
Table 12.2LifeExpectancy,byAgeandGender,1900–2007—Continued
Age Male Female Total
1979–81 Newborn 70.1 77.6 73.9 1 70.1 77.5 73.8 5 66.3 73.7 70.0 15 56.5 63.8 60.2 25 47.4 54.2 50.8 35 38.2 44.5 41.4 45 29.2 35.2 32.3 55 21.1 26.4 23.9 65 14.2 18.4 16.5 75 8.9 11.6 10.5 85 5.1 6.4 6.0
Age Male Female Total
1989–91 Newborn 71.8 78.8 75.4 1 71.6 78.5 75.1 5 67.7 74.6 71.2 15 57.9 64.7 61.4 25 48.7 55.0 51.9 35 39.6 45.4 42.6 45 30.7 36.0 33.4 55 22.3 27.1 24.8 65 15.1 19.0 17.3 75 9.4 12.1 11.0 85 5.3 6.7 6.2
Age Male Female Total
1998 Newborn 73.8 79.5 76.7 1 73.4 79.0 76.3 5 69.5 75.1 72.4 15 59.7 65.2 62.5 25 50.3 55.5 53.0 35 41.0 45.8 43.5 45 31.9 36.4 34.3 55 23.5 27.4 25.5 65 16.0 19.2 17.8 75 10.0 12.2 11.3 85 5.5 6.7 6.3 100 2.3 2.7 2.6
Age Male Female Total
1999 Newborn 73.9 79.4 76.7 1 73.5 78.9 76.3 5 69.6 75.0 72.4 15 59.8 65.1 62.5 25 50.4 55.4 53.0 35 41.1 45.7 43.5 45 32.0 36.3 34.3 55 23.5 27.3 25.5 65 16.1 19.1 17.7 75 10.0 12.1 11.2 85 5.5 6.6 6.3 100 2.4 2.7 2.6
Continued
128 American Council of Life Insurers
Table 12.2LifeExpectancy,byAgeandGender,1900–2007—Continued
Age Male Female Total
2000 Newborn 74.1 79.5 76.9 1 73.7 79.0 76.4 5 69.8 75.1 72.5 15 59.9 65.2 62.6 25 50.6 55.4 53.1 35 41.3 45.8 43.6 45 32.2 36.3 34.4 55 23.8 27.4 25.7 65 16.3 19.2 17.9 75 10.1 12.1 11.3 85 5.6 6.7 6.3 100 2.4 2.7 2.6
Age Male Female Total
2001 Newborn 74.4 79.8 77.2 1 74.0 79.3 76.7 5 70.1 75.4 72.8 15 60.2 65.5 62.9 25 50.9 55.7 53.4 35 41.5 46.0 43.9 45 32.5 36.6 34.7 55 24.0 27.7 26.0 65 16.4 19.4 18.1 75 10.2 12.4 11.5 85 5.7 6.9 6.5 100 2.5 2.8 2.7
Age Male Female Total
2002 Newborn 74.5 79.9 77.3 1 74.1 79.4 76.8 5 70.2 75.4 72.9 15 60.3 65.5 63.0 25 51.0 55.8 53.5 35 41.6 46.1 44.0 45 32.6 36.7 34.8 55 24.1 27.7 26.1 65 16.6 19.5 18.2 75 10.3 12.4 11.5 85 5.7 6.9 6.5 100 2.5 2.8 2.7
Continued
129Mortality
Table 12.2LifeExpectancy,byAgeandGender,1900–2007—Continued
Age Male Female Total
2003 Newborn 74.8 80.1 77.5 1 74.3 79.6 77.0 5 70.4 75.7 73.1 15 60.6 65.8 63.2 25 51.2 56.0 53.7 35 41.9 46.4 44.2 45 32.8 37.0 35.0 55 24.4 28.0 26.3 65 16.8 19.8 18.4 75 10.5 12.6 11.8 85 6.0 7.2 6.8 100 2.3 2.6 2.6
Age Male Female Total
2004 Newborn 75.2 80.4 77.8 1 74.7 79.9 77.4 5 70.8 76.0 73.5 15 61.0 66.1 63.6 25 51.6 56.3 54.0 35 42.2 46.6 44.5 45 33.1 37.2 35.3 55 24.7 28.3 26.6 65 17.1 20.0 18.7 75 10.7 12.8 11.9 85 6.1 7.2 6.8 100 2.3 2.6 2.6
Age Male Female Total
2005 Newborn 75.2 80.4 77.8 1 74.7 79.9 77.4 5 70.8 76.0 73.5 15 61.0 66.1 63.6 25 51.6 56.4 54.1 35 42.3 46.3 44.6 45 33.2 37.2 35.3 55 24.8 28.3 26.7 65 17.2 20.0 18.7 75 10.8 12.8 12.0 85 6.1 7.2 6.8 100 2.3 2.6 2.6
130 American Council of Life Insurers
Table 12.2LifeExpectancy,byAgeandGender,1900–2007—Continued
Age Male Female Total
2006 Newborn 75.1 80.2 77.7 1 74.7 79.7 77.2 5 70.8 75.8 73.3 15 60.9 65.9 63.4 25 51.5 56.1 53.9 35 42.2 46.4 44.4 45 33.1 37.0 35.2 55 24.7 28.0 26.5 65 17.0 19.7 18.5 75 10.5 12.3 11.6 85 5.7 6.8 6.4 100 2.0 2.3 2.3
Age Male Female Total
2007 Newborn 75.4 80.4 77.9 1 74.9 79.9 77.5 5 71.0 76.0 73.6 15 61.1 66.1 63.7 25 51.8 56.3 54.1 35 42.5 46.7 44.6 45 33.3 37.2 35.4 55 24.9 28.2 26.7 65 17.2 19.9 18.6 75 10.6 12.5 11.7 85 5.8 6.8 6.5 100 2.1 2.3 2.3
Source: U.S. Department of Health and Human Services’ National Center for Health Statistics, National Vital Statistics ReportsNotes: Alaska and Hawaii are included as of 1959. For decennial periods prior to 1929-31, data represent death registration states only: 1900-02 and 1909-11, 10 states and the District of Columbia; 1919-21, 34 states and the District of Columbia. Beginning with 1970, data exclude deaths of nonresidents of the United States.
131Mortality
Table 12.3MortalityTables
2001CSOTable IndividualAnnuity2000Table1
Male Female Male Female
Life Life Life Life Deaths expectancy Deaths expectancy Deaths expectancy Deaths expectancy per1,000 (years) per1,000 (years) per1,000 (years) per1,000 (years)
Newborn 1.0 76.6 0.5 80.8 — — — —1 0.6 75.7 0.4 79.9 — — — —2 0.4 74.7 0.3 78.9 — — — —3 0.3 73.8 0.2 77.9 — — — —4 0.2 72.8 0.2 76.9 — — — —5 0.2 71.8 0.2 76.0 0.3 76.6 0.2 80.76 0.2 70.8 0.2 75.0 0.3 75.6 0.1 79.77 0.2 69.8 0.2 74.0 0.3 74.7 0.1 78.78 0.2 68.8 0.2 73.0 0.3 73.7 0.1 77.79 0.2 67.9 0.2 72.0 0.3 72.7 0.1 76.710 0.2 66.9 0.2 71.0 0.4 71.7 0.1 75.711 0.3 65.9 0.2 70.0 0.4 70.8 0.1 74.712 0.3 64.9 0.3 69.1 0.4 69.8 0.1 73.713 0.4 63.9 0.3 68.1 0.4 68.8 0.2 72.814 0.5 63.0 0.3 67.1 0.4 67.8 0.2 71.815 0.6 62.0 0.4 66.1 0.4 66.9 0.2 70.816 0.7 61.0 0.4 65.1 0.4 65.9 0.2 69.817 0.9 60.1 0.4 64.2 0.4 64.9 0.2 68.818 0.9 59.1 0.4 63.2 0.5 63.9 0.2 67.819 1.0 58.2 0.5 62.2 0.5 63.0 0.2 66.820 1.0 57.2 0.5 61.3 0.5 62.0 0.3 65.921 1.0 56.3 0.5 60.3 0.5 61.0 0.3 64.922 1.0 55.3 0.5 59.3 0.5 60.1 0.3 63.923 1.0 54.4 0.5 58.3 0.6 59.1 0.3 62.924 1.1 53.5 0.5 57.4 0.6 58.1 0.3 61.925 1.1 52.5 0.5 56.4 0.6 57.2 0.3 60.926 1.1 51.6 0.6 55.4 0.6 56.2 0.3 60.027 1.2 50.6 0.6 54.5 0.7 55.2 0.4 59.028 1.2 49.7 0.6 53.5 0.7 54.3 0.4 58.029 1.2 48.7 0.7 52.5 0.7 53.3 0.4 57.030 1.1 47.8 0.7 51.6 0.7 52.3 0.4 56.031 1.1 46.8 0.7 50.6 0.7 51.4 0.4 55.132 1.1 45.9 0.8 49.6 0.7 50.4 0.4 54.133 1.2 45.0 0.8 48.7 0.7 49.5 0.4 53.134 1.2 44.0 0.9 47.7 0.7 48.5 0.4 52.135 1.2 43.1 1.0 46.8 0.7 47.5 0.5 51.236 1.3 42.1 1.0 45.8 0.7 46.6 0.5 50.237 1.3 41.2 1.1 44.8 0.7 45.6 0.5 49.238 1.4 40.2 1.2 43.9 0.8 44.6 0.5 48.239 1.5 39.3 1.2 42.9 0.9 43.7 0.6 47.340 1.7 38.3 1.3 42.0 1.0 42.7 0.6 46.341 1.8 37.4 1.4 41.1 1.1 41.7 0.7 45.342 2.0 36.5 1.5 40.1 1.2 40.8 0.7 44.343 2.2 35.5 1.6 39.2 1.4 39.8 0.8 43.444 2.4 34.6 1.7 38.2 1.5 38.9 0.9 42.445 2.7 33.7 1.9 37.3 1.8 37.9 0.9 41.446 2.9 32.8 2.1 36.4 2.0 37.0 1.0 40.547 3.2 31.9 2.3 35.4 2.2 36.1 1.1 39.5
Continued
132 American Council of Life Insurers
Table 12.3MortalityTables—Continued
2001CSOTable IndividualAnnuity2000Table1
Male Female Male Female
Life Life Life Life Deaths expectancy Deaths expectancy Deaths expectancy Deaths expectancy per1,000 (years) per1,000 (years) per1,000 (years) per1,000 (years)
48 3.3 31.0 2.5 34.5 2.5 35.2 1.3 38.649 3.5 30.1 2.8 33.6 2.7 34.2 1.4 37.650 3.8 29.2 3.1 32.7 3.0 33.3 1.5 36.751 4.1 28.3 3.4 31.8 3.3 32.4 1.7 35.752 4.5 27.4 3.8 30.9 3.6 31.5 1.9 34.853 4.9 26.5 4.2 30.0 3.9 30.7 2.0 33.854 5.5 25.6 4.6 29.1 4.2 29.8 2.2 32.955 6.2 24.8 5.1 28.3 4.5 28.9 2.5 32.056 6.9 23.9 5.6 27.4 4.9 28.0 2.7 31.157 7.6 23.1 6.2 26.6 5.2 27.2 2.9 30.158 8.3 22.3 6.8 25.7 5.6 26.3 3.2 29.259 9.0 21.5 7.4 24.9 6.0 25.4 3.5 28.360 9.9 20.6 8.0 24.1 6.4 24.6 3.9 27.461 10.9 19.8 8.7 23.3 6.9 23.7 4.2 26.562 12.3 19.1 9.4 22.5 7.5 22.9 4.7 25.663 13.7 18.3 10.1 21.7 8.2 22.1 5.1 24.864 15.2 17.5 11.0 20.9 9.0 21.3 5.7 23.965 16.9 16.8 11.9 20.1 9.9 20.4 6.3 23.066 18.5 16.1 12.8 19.4 11.0 19.6 6.9 22.267 20.1 15.4 13.9 18.6 12.3 18.9 7.6 21.368 21.9 14.7 15.1 17.9 13.7 18.1 8.3 20.569 23.6 14.0 16.4 17.1 15.2 17.3 9.1 19.670 25.8 13.3 17.8 16.4 17.0 16.6 10.0 18.871 28.2 12.7 19.5 15.7 18.9 15.9 11.1 18.072 31.3 12.0 21.3 15.0 21.0 15.2 12.4 17.273 34.6 11.4 23.3 14.3 23.2 14.5 13.9 16.474 38.1 10.8 25.5 13.6 25.6 13.8 15.6 15.675 41.9 10.2 27.9 13.0 28.3 13.2 17.6 14.976 46.1 9.6 30.5 12.3 31.2 12.5 19.8 14.177 50.9 9.0 33.4 11.7 34.4 11.9 22.3 13.478 56.6 8.5 36.6 11.1 37.9 11.3 25.2 12.779 63.1 8.0 40.1 10.5 41.8 10.8 28.3 12.080 70.1 7.5 43.9 9.9 46.0 10.2 31.9 11.381 78.2 7.0 49.1 9.3 50.6 9.7 36.0 10.782 86.5 6.6 55.0 8.8 55.7 9.2 40.6 10.183 95.5 6.1 60.8 8.3 61.1 8.7 45.7 9.584 105.4 5.7 67.3 7.8 66.9 8.2 51.5 8.985 116.6 5.4 74.5 7.3 73.3 7.8 57.9 8.486 128.9 5.0 81.0 6.9 80.1 7.3 65.1 7.987 142.4 4.7 90.8 6.4 87.4 6.9 73.1 7.488 156.7 4.4 101.1 6.0 95.2 6.5 82.0 6.989 171.9 4.1 112.0 5.6 103.5 6.2 91.6 6.590 187.7 3.8 121.9 5.3 112.2 5.8 101.8 6.191 202.4 3.6 126.9 5.0 121.4 5.5 112.4 5.792 217.8 3.4 136.9 4.6 131.0 5.2 123.3 5.493 234.0 3.1 151.6 4.3 141.0 4.9 134.5 5.194 251.1 3.0 170.3 3.9 151.4 4.6 145.7 4.895 269.2 2.8 193.7 3.6 162.2 4.3 156.8 4.5
133Mortality
Table 12.3MortalityTables—Continued
2001CSOTable IndividualAnnuity2000Table1
Male Female Male Female
Life Life Life Life Deaths expectancy Deaths expectancy Deaths expectancy Deaths expectancy per1,000 (years) per1,000 (years) per1,000 (years) per1,000 (years)
96 285.6 2.6 215.7 3.4 173.3 4.1 167.8 4.297 303.2 2.5 238.5 3.2 184.7 3.8 178.6 4.098 321.9 2.3 242.2 3.0 196.9 3.6 189.6 3.899 341.9 2.2 255.2 2.8 210.5 3.4 201.6 3.5100 363.2 2.1 275.7 2.6 225.8 3.1 215.0 3.3101 380.1 2.0 297.8 2.4 243.4 2.9 230.6 3.0102 398.1 1.9 322.2 2.2 263.7 2.7 248.8 2.8103 417.2 1.8 349.1 2.1 287.3 2.4 270.3 2.6104 437.6 1.7 378.6 1.9 314.6 2.2 295.7 2.3105 459.2 1.6 410.6 1.7 346.2 2.0 325.6 2.1106 482.2 1.5 443.3 1.6 382.4 1.8 360.5 1.9107 506.7 1.4 476.9 1.5 423.8 1.6 401.1 1.7108 532.7 1.3 510.7 1.4 470.9 1.4 447.9 1.5109 560.3 1.2 545.8 1.3 524.1 1.3 501.5 1.3110 589.6 1.1 581.8 1.2 584.0 1.1 562.6 1.2111 620.8 1.1 616.3 1.1 651.0 1.0 631.6 1.0112 653.8 1.0 649.9 1.0 725.6 0.8 709.3 0.9113 688.9 0.9 680.4 0.9 808.3 0.7 796.2 0.7114 726.2 0.9 723.4 0.9 899.6 0.6 892.9 0.6115 765.7 0.8 763.4 0.8 1000.0 0.5 1000.0 0.5116 807.6 0.7 804.9 0.7117 852.1 0.7 850.4 0.7118 899.2 0.6 892.4 0.6119 949.2 0.6 935.1 0.6120 1000.0 0.5 1000.0 0.5
Source: National Association of Insurance Commissioners.1Projected to 2000. Mortality rates are conservative in relation to the actual and projected experience on which they are based.
134 American Council of Life Insurers
Appendix
Blank Page 130
137
A Accelerated death benefit Benefitpaid,underclearlydefinedhealth-relatedcircumstances,
toapolicyholderpriortohisorherdeath.Accelerateddealthbenefitsarealsoknownas
living benefits.
Accidental death benefit Aprovisionaddedtoalifeinsurancepolicyforpaymentofan
additionalbenefitifdeathiscausedbyanaccident.Alsoknownasdouble indemnity.
Actuary Apersonprofessionallytrainedinthetechnicalaspectsofinsuranceandrelated
fields, particularly in themathematics of insurance such as the calculationof premiums,
reserves,andothervalues.
Adjustable life insurance Atypeoflifeinsurancethatallowsthepolicyholdertochange
theplanof insurance, raise or lower thepolicy’s face amount, increase or decrease the
premium,andlengthenorshortentheprotectionperiod.
Adjuster Aperson,usuallyemployedbyaproperty/casualtyinsurer,whoevaluateslosses
andsettlesclaims.Independentadjustersareindependentcontractorswhoadjustclaimsfor
theinsurancecompanies.
Agent A representativeof an insurance companywho is authorized to sell and service
insurancecontracts.Lifeinsuranceagentsarealsoknownaslife underwriters or producers.
Annuitant Thepersonwhoselifeexpectancyisusedtodeterminethepayoutofanannuity.
Annuity Afinancialcontractissuedbyalifeinsurancecompanythatofferstax-deferred
savingsandachoiceofpayoutoptionstomeetanowner’sneedsinretirement:incomefor
life,incomeforacertainperiodoftime,oralumpsum.
Annuity certain A contract that provides an income for a specified number of years,
regardlessoflifeordeath.
A GLOSSARYOfInSuRAnce-ReLAtedteRmS (AS OF SepTeMBeR 2010)
138 American Council of Life Insurers
Annuity consideration Thepayment,oroneofregularperiodicpayments,thatapolicyholder
makestoanannuity.
Application Astatementofinformationmadebyaprospectivepurchaserthathelpstheinsurer
assesstheacceptabilityofrisk.
Assets Propertyownedbyaninsurancecompany—includingstocks,bondsandrealestate.Insurance
accountingfocusesonsolvencyandtheabilitytopayclaims,thereforeaconservativevaluationof
assetsisrequired.Thisprohibitscompaniesfromlistingassetsontheirbalancesheetswhenvalues
areuncertain.
Asset valuation reserve (AVR) Areservethatmakesprovisionsforcredit-relatedlossesonfixed-
incomeassets(defaultcomponent)aswellasalltypesofequityinvestments(equitycomponent).
Assignment Thelegaltransferofoneperson’sinterestinaninsurancepolicytoanotherperson.
Assume Toaccepttheriskofpotentiallossfromanotherinsurer.
Assumption reinsurance Areinsuranceagreementinwhichonecompanypermanentlytransfers
fullresponsibilityforablockofpoliciestoanothercompany.Afterthetransfer,thecedingcompany
isnolongerapartytotheinsuranceagreement.
Automatic premium loan Aloanprovisioninalife insurancepolicyallowinganypremium
notpaidbytheendofthegraceperiod(usually30or31days)tobepaidautomaticallythrougha
policyloanifcashvalueissufficient.
B Balance sheet Informationonacompany’sfinancialconditionatasinglepointintimeshowing
assets,investments,andliabilities.Thebalancesheetalsorevealsacompany’sequity,knownas
policyholdersurplus.Changesinthesurplusareoneindicatorofacompany’sfinancialstanding.
Bank holding company A company that owns or controls one ormore banks. The Federal
Reserveregulatesandsupervisesbankholdingcompanyactivitiessuchasapprovingmergersand
acquisitions.TheauthorityoftheReserveapplieseventhoughabankownedbyaholdingcompany
maybeundertheprimarysupervisionoftheComptrolleroftheCurrencyortheFDIC.
Beneficiary Thepersonorfinancialentity(forinstance,atrustfund)namedinalifeinsurance
policyorannuitycontractastherecipientofpolicyproceedsintheeventofthepolicyholder’sdeath.
Benefit Theamountpayablebytheinsurancecompanytoaclaimant,assignee,orbeneficiary
whentheinsuredsuffersalosscoveredbythepolicy.
139Glossary
Bond Asecurityobligatingtheissuertopayinterestatspecifiedintervalsandtorepaytheprincipal
atmaturity.Bondsareaformofsuretyship:Varioustypesguaranteeapaymentorreimbursement
forfinanciallossesresultingfromdishonesty,failuretoperform,andotherfailures.
Bond rating Anevaluationofabond’sfinancialstrengthbyanestablishedratingagencysuchas
Standard&Poor’sorMoody’sInvestorServices.
Broker Asalesandservicerepresentativewhohandlesinsuranceforclientsandgenerallysells
insuranceofvariouskindsfromonecompanyorseveral.
Business disability insurance Disability insurancepurchasedbyabusinessonamemberof
afirm.Thisinsuranceisoftenusedtoprotectbusinesspartnersagainstlosscausedbyapartner’s
disabilityandtoreimbursecorporationsforlosscausedbythedisabilityofakeyemployee.
Business life insurance Insurancepurchasedbyabusinessonthelifeofamemberofthefirm.
Thisinsuranceprotectssurvivingbusinesspartnersagainstlosscausedbythedeathofapartnerand
reimbursescorporationsforlosscausedbythedeathofakeyemployee.
C Capacity Theamountofinsuranceavailabletomeetdemand.Availabilitydependsontheindustry’s
capacityforrisk.Foranindividualinsurer,itisthemaximumamountofriskitcanunderwritebased
onitsfinancialcondition.Aninsurer’scapitalrelativetoitsexposuretolossisanimportantmeasure
ofitssolvency.
Captive agent Apersonwhorepresentsonlyoneinsurancecompanyandisrestrictedbyagreement
fromsubmittingbusinesstoanyothercompanyunlessrejectedfirstbythecaptiveagent’scompany.
Capital stock Theinitialbookvalueofstocksoldbyacompanytostartitsoperations.
Cash balance plan Adefinedbenefitplanthatstronglyresemblesadefinedcontributionplan.
Benefitsaccruethroughemployercontributionstoemployeeaccountsandinterestcreditstobalances
inthoseaccounts.Theaccountsserveasbookkeepingdevicestotrackbenefitaccruals.
Cash value Theamountavailableincashuponsurrenderofapermanentlifeinsurancepolicy.
Alsoknownascashsurrendervalue.
Cede Totransfertheriskofpotentiallosstoanotherinsurer.
Certificate Astatementissuedtopersonsinsuredunderagrouppolicythatdefinestheessential
provisionsoftheircoverage.
Claim Notificationtoaninsurancecompanythatpaymentofanamountisdueunderthetermsof
apolicy.
140 American Council of Life Insurers
COBRA (Consolidated Omnibus Budget Reconciliation Act) Afederallawunderwhich
grouphealthplanssponsoredbyemployerswithtwentyormoreemployeesmustoffercontinuation
ofinsurancecoveragetoemployeesandtheirdependentsaftertheyleavetheiremployment.Under
COBRA,coveragecanbecontinuedforupto18months;theemployeepaystheentirepremium.
Codification AprocessundertakenbyNAIC to redefine life company statutory accounting to
ensureconsistencyinhowcompaniespresenttheiraccountsintheirannualstatements.Thisprocess
culminatedinthe2001annualstatements,thestructureofwhichwasnoticeablydifferentfromthe
previousyears.
Convertible term insurance Term insurance that can be exchanged, at the option of the
policyholderandwithoutevidenceofinsurability,foranotherplanofinsurance.
Credit disability insurance Disabilityinsuranceissuedthroughalenderorlendingagencyto
coverpaymentofaloan,aninstallmentpurchase,orotherobligationincaseofdisability.
Credit life insurance Termlifeinsuranceissuedthroughalenderorlendingagencytocover
paymentofaloan,aninstallmentpurchase,orotherobligationincaseofdeath.
d Declination Rejectionofanapplicationforinsurancecoveragebyaninsurancecompany,usually
duetotheapplicant’shealthoroccupation.
Deductible The amount of loss paid by thepolicyholder. Either a specifieddollar amount, a
percentageoftheclaimamount,oraspecifiedamountoftimethatmustelapsebeforebenefitsare
paid.Thelargerthedeductible,thelowerthepremiumchargedforthesamecoverage.
Deferred annuity Acontractinwhichannuitypayoutsbeginatafuturedate.
Deferred group annuity Atypeofgroupannuityprovidingforthepurchaseeachyearofapaid-
updeferredannuityforeachgroupmember.Thetotalamountreceivedbyamemberatretirement
isthesumofthesedeferredannuities.
Defined benefit plan Apensionplanthatspecifiesthebenefitsanemployeewillreceiveafter
retirement.Benefitstypicallyarebasedonlengthofserviceandsalary,andareusuallyfundedby
theemployeronbehalfofeachplanparticipant.
Defined contribution plan Apensionplanthatspecifiesthecontributionsmadebyemployees,
andinmanycasestheemployer,onbehalfofeachplanparticipant.Thesefundsaccumulateforeach
participantuntilretirement,whentheyaredistributedasalumpsumormonthlyannuity.Benefits
arebasedontheamountofcontributionsplusearnings.
141Glossary
Deposit administration group annuity Atypeofgroupannuitythatallowscontributionsto
accumulateinanundividedfund,outofwhichannuitiesarepurchasedaseachmemberofthe
groupretires.
Deposit term insurance Aformofterminsuranceinwhichthefirst-yearpremiumislargerthan
subsequentpremiums.Apartialendowmenttypicallyispaidattheendofthetermperiod.Inmany
cases,thepartialendowmentcanbeappliedtowardthepurchaseofanewtermorwholelifepolicy.
Deposit-type contracts Contractsthatdonotincludemortalityormorbidityrisks.
Disability Aphysicalormentalconditionthatmakesaninsuredpersonincapableofworking.
Disability benefit Thebenefitpaidunderadisability income insurancepolicy;alsoa feature
addedtosomelifeinsurancepoliciesprovidingforwaiverofpremium,andsometimespaymentof
monthlyincome,ifthepolicyholderbecomestotallyandpermanentlydisabled.
Disability income insurance Insurance thatprovidesperiodicpayments,or insomecasesa
lump-sumpayment,basedontheinsured’sincomereplacementneeds,whentheinsuredisunable
toworkduetoillnessorinjury.
Dividend Anamountofmoneyreturnedtotheholderofaparticipatinglifeinsurancepolicy.The
moneyresultsfromactualmortality,interest,andexpensesthatweremorefavorablethanexpected
whenthepremiumswereset.Theamountofanydividendissetbytheinsurerbasedontheinsurer’s
standards.
Dividend addition Anamountofpaid-upinsurancepurchasedwithapolicydividendandadded
tothepolicy’sfaceamount.
e Earned premium Theportionofpremiumthatappliestotheexpiredpartofthepolicyperiod.
Insurancepremiumsarepayableinadvancebuttheinsurancecompanydoesnotfullyearnthem
untilthepolicyperiodexpires.
Endowment Life insurancepayable to thepolicyholderon thepolicy’smaturitydate,or to a
beneficiaryiftheinsureddiespriortothatdate.
Equity in investments Theownershipinterestofshareholders.Inacorporation,stocksasopposed
tobonds.
Evidence of insurabilityThecommonrequirementbylifeinsurancecompaniesthatpotential
policyholdersundergoaphysicalexaminationormedicaltests,suchasbloodpressureorcholesterol
screening,beforetheapplicantcanpurchaseanindividuallifeinsurancepolicy.
142 American Council of Life Insurers
Extended term insurance Aformofinsuranceavailableasanon-forfeitureoptionproviding
theoriginalamountofinsuranceforalimitedtime.
Extra risk Apersonpossessingagreater-than-averagelikelihoodofloss.
F Face amount Theamountstatedonthefaceofalifeinsurancepolicythatwillbepaidupon
deathorpolicymaturity.Theamountexcludesdividendadditionsoradditionalamountspayable
underaccidentaldeathorotherspecialprovisions.
Family policy Alifeinsurancepolicyprovidinginsuranceonallorseveralfamilymembersinone
contract.Itgenerallyprovideswholelifeinsuranceontheprincipalbreadwinnerandsmallamounts
ofterminsuranceonthespouseandchildren,includingthosebornafterthepolicyisissued.
Fiduciary Apersonororganizationauthorizedtocontrolormanagepensionassetstoadministera
pensionplan.Fiduciariesarelegallyobligatedtodischargetheirdutiessolelyintheinterestofplan
participantsandbeneficiaries,andareaccountableforanyactionsthatmaybeconstruedbycourtsas
breachingthattrust.
Fixed annuity Adeferredannuitycontractinwhichthelifeinsurancecompanycreditsafixed
rateofreturnonpremiumspaidoranimmediateannuityinwhichtheperiodicamountisfixed.
Flexible premium policy or annuity Alifeinsurancepolicyorannuitycontractthatallowsthe
amountandfrequencyofpremiumpaymentstobevaried.
401(k) plan Anemployment-basedretirementsavingsplanthatallowsemployeestomaketax-
deferredcontributionsfromcurrentearnings.
403(b) plan A retirement savings plan, similar to a 401(k), for employees of charitable and
educationalorganizations.
457 plan A retirement savingsplan, similar toa401(k), foremployeesof stateandmunicipal
governments.
Fraternal life insurance Lifeinsuranceprovidedbyfraternalordersorsocietiestotheirmembers.
Fraud Intentionallyingorconcealmentbypolicyholderstoobtainpaymentofaninsuranceclaim
thatwouldotherwisenotbepaid,orlyingormisrepresentationbytheinsurancecompanymanagers,
employees,agents,andbrokersforfinancialgain.
G General account Anundividedaccountinwhichlifeinsurersrecordallincomingfunds.Ageneral
accountisusuallyaninsurer’slargest,althoughseparateaccountscanalsobeusedtofundspecific
liabilitiesaswell.
143Glossary
Grace period Aperiodofusuallyanumberofdaysfollowingeachinsurancepremiumduedate
exceptthefirst,duringwhichanoverduepremiummaybepaidandthepolicybemaintained.All
policyprovisionsremaininforceduringthisperiod.
Group annuity Apensionplanprovidingannuitiesatretirementtoagroupofpeopleundera
mastercontract,usuallyissuedtoanemployerforthebenefitofemployees.Eachgroupmember
holdsacertificateasevidenceofhisorherannuity.
Group life insurance Lifeinsuranceonagroupofpeople,usuallyissuedtoanemployerforthe
benefitofemployees.Eachgroupmemberholdsacertificateasevidenceofhisorherinsurance.
Guaranteed interest contract (GIC) Acontractofferedbyaninsurancecompanyguaranteeing
arateofreturnonassetsforafixedperiod,andpaymentofprincipalandaccumulatedinterestatthe
endoftheperiod.GICssometimesareusedtofundthefixed-incomeoptionindefinedcontribution
plans,suchas401(k)s.
i Immediate annuity Anannuitycontractinwhichperiodicpaymentsbeginimmediatelyorwithin
oneyearofthepolicy’sissue.
Indemnity reinsurance Aformofreinsuranceinwhichtheriskispassedtoareinsurer,which
reimbursesthecedingcompanyforcoveredlosses.Thecedingcompanyretainsitsliabilitytoand
contractualrelationshipwiththeinsured.
Individual life insurance Life insurance on a person with premiums payable annually,
semiannually,quarterly,ormonthly.
Individual policy pension trust Atypeofpensionplanfrequentlyusedforsmallgroupsand
administeredbytrusteesauthorizedtopurchaseindividuallevel-premiumpoliciesorannuitycontracts
foreachplanmember.Thepoliciesusuallyprovidebothlifeinsuranceandretirementbenefits.
Individual retirement account (IRA) An account to which a person can make annual
contributionsofearningsuptoaspecifieddollarlimit.Thesecontributionsaretax-deductiblefor
workerswhoarenotcoveredbyanemployment-basedretirementplan,regardlessofincome,or
whoseincomedoesnotexceedcertaintaxableincomelevels.
Insolvency Insurer’slegalinabilitytopayitsfuturepolicyholderobligations.Insuranceinsolvency
standardsandtheregulatoryactionstakenvaryfromstatetostate.Typically,thefirstindicationsof
aninsurer’sfinancialstressisitsinabilitytopassthefinancialtestsregulatorsroutinelyadminister.
Institutional investor Anorganizationsuchasabankorinsurancecompanythatbuysandsells
largequantitiesofsecurities.
Insurable risk Risksforwhichitisrelativelyeasytogetinsurance.Suchrisksmeetcertaincriteria
includingbeingdefinable,accidentalinnature,andpartofagroupofsimilarriskslargeenough
tomakelossespredictable.Suchconditionsmakeitpossibleforaninsurertoofferinsuranceata
reasonablerate.
144 American Council of Life Insurers
Insurance Asystemtomakecoverageoflargefinanciallossesaffordablebypoolingtherisksof
manyindividualsorbusinessentitiesandtransferringthemtoaninsurancecompanyinreturnfor
apremium.
Insurance examiner The state insurance department representative assigned to conduct the
officialauditandexaminationofaninsurancecompany’soperations.
Insured Thepersononwhoselifeaninsurancepolicyisissued.Alsoknownasinsuredlife.
Interest maintenance reserve (IMR) Areservethatcapturesallrealized,interest-relatedcapital
gainsandlossesonfixed-incomeassets.Thesegainsandlossesareamortizedintoincomeoverthe
remaininglifeoftheinvestmentsold.
J Joint and survivor annuity Anannuityinwhichpaymentsaremadetotheownerforlifeand,
aftertheowner’sdeath,tothedesignatedbeneficiaryforlife.
K Keogh (H.R. 10) account Aretirementsavingsaccounttowhichaself-employedpersoncan
makeannualtax-deductiblecontributions,subjecttolimitations.
L Lapsed policy Aninsurancepolicyterminatedattheendofthegraceperiodbecauseofnonpayment
ofpremiums.Seenon-forfeiturevalue.
Legal reserve life insurance company Alifeinsureroperatingunderstateinsurancelawsthat
specifytheminimumbasisforreservesthatthecompanymustmaintainonitspolicies.
Level premium life insurance Lifeinsuranceforwhichthepremiumremainsthesamefromyear
toyear.Thepremiumismorethantheactualcostofprotectionduringearlieryearsofthepolicy
andlessthantheactualcostinlateryears.Theinitialoverpaymentsbuildareservewhich,together
withinteresttobeearned,balancestheunderpaymentsoflateryears.
Life annuity Anannuitycontractthatprovidesperiodicincomepaymentsforlife.
Life expectancy The average years of life remaining for a groupof persons of a given age,
accordingtoamortalitytable.
Life insurance in force Thesumoffaceamountsanddividendadditionsoflifeinsurancepolicies
outstandingatagiventime.Additionalamountspayableunderaccidentaldeathorotherspecial
provisionsareexcluded.
Limited payment life insurance Wholelifeinsuranceonwhichpremiumsarepayablefora
specifiednumberofyears,oruntildeathifitoccursbeforetheendofthespecifiedperiod.
145Glossary
Long-term care insurance Insurancethatprovidesfinancialprotectionforpersonswhobecome
unabletocareforthemselvesbecauseofchronicillness,disability,orcognitiveimpairmentsuchas
Alzheimer’sdisease.
Lump-sum distribution Thenon-periodicwithdrawalofmoneyinvestedinanannuity.
M Malpractice insurance Professionalliabilitycoverageforphysicians,lawyers,andotherspecialists
againstlawsuitsallegingnegligenceorerrorsandomissionsthathaveharmedtheirclients.
Managed care Anarrangementbetweenanemployerorinsurerandselectedproviderstoprovide
comprehensive health care at a discount tomembers of the insured group and coordinate the
financinganddeliveryofhealthcare.Managedcareusesmedicalprotocolsandproceduresagreed
onbythemedicalprofessiontobecosteffective.Theseprotocolsarealsoknownasmedical practice
guidelines.
Master policy Apolicyissuedtoanemployerortrusteeestablishingagroupinsuranceplanfor
designatedmembersofaneligiblegroup.
Mediation Legalprocedureinwhichathirdpartyorpartiesattemptstoresolveaconflictbetween
twootherparties.Mediationcanbebindingornon-binding.
Medicaid Afederalandstatepublicassistanceprogramcreatedin1965andadministeredbythe
statesforpeoplewhoseincomeandresourcesareinsufficienttopayforhealthcare.
Medicare Federalprogramforpeoplesixty-fiveyearsorolderthatpayspartofthecostsassociated
withtheirhealthcaresuchashospitalstays,surgery,homecareandnursingcare.
Mortality and expense charge Thefeeforaguaranteethatannuitypaymentswillcontinuefor
life.
Mortality table A statistical table showing thedeath rate at each age, usually expressedper
thousand.
Mutual life insurance company A life insurance company without stockholders whose
managementisdirectedbyaboardelectedbythepolicyholders.Mutualcompaniesgenerallyissue
participatinginsurance.
n Non-forfeiture value Thevalueofaninsurancepolicyifitiscancelledorrequiredpremium
paymentsarenotpaid.Thevalueisavailabletothepolicyholdereitherascashorreducedpaid-up
insurance.
Non-medical limit Themaximumfacevalueofapolicythatagivencompanywillissuewithout
amedicalexaminationoftheapplicant.
146 American Council of Life Insurers
Nonparticipating policy Alifeinsurancepolicyunderwhichthecompanydoesnotdistributeto
policyholdersanypartofitssurplus.Premiumsusuallyarelowerthanforcomparableparticipating
policies.Somenonparticipatingpolicieshavebothamaximumpremiumandacurrentlowerpremium,
whichreflectsanticipatedexperiencemorefavorablethanthecompanyiswillingtoguarantee.The
currentpremiummaychangefromtimetotimefortheentireblockofbusinesstowhichthepolicy
belongs.Seeparticipating policy.
Nonproportional reinsurance Aformofreinsuranceinwhichthereinsurer’sliabilitydepends
onthenumberoramountofclaimsincurredinagivenperiod.
O Operating expenses Thecostofmaintainingabusiness,includingproperty,insurance,taxes,
utilitiesandrent,butexcludesincometax,depreciation,andotherfinancingexpenses.
Options Contractsthatallow,butdonotoblige,thebuyingorsellingofassetsatacertaindateat
asetprice.
Ordinary life insurance Alifeinsurancepolicythatremainsinforcefortheinsured’slifetime,
usuallyforalevelpremium.Alsoreferredtoaswholelifeinsurance.Incontrast,termlifeinsurance
onlylastsforaspecifiednumberofyears(butmayberenewable).
p Paid-up insurance Insuranceonwhichallrequiredpremiumshavebeenpaid;frequentlyrefers
tothereducedpaid-upinsuranceavailableasanonforfeitureoption.
Partial disability benefit A benefit sometimes found in disability incomepolicies providing
paymentofreducedmonthlyincomeiftheinsuredcannotworkfulltimeorisunabletoearna
specifiedpercentageofpredisabilityearningsduetoadisability.
Participating policy Alifeinsurancepolicyunderwhichthecompanydistributestopolicyholders
thepartofitssurplusthatitsboardofdirectorsdeterminesisnotneededattheendofthebusiness
year.Suchadistributionreducesthepremiumthatthepolicyholderhadpaid.Seepolicydividend
andnonparticipatingpolicy.
Pensions Programstoprovideemployeeswithretirementincomeaftertheymeetminimumageand
servicerequirements.Lifeinsurersholdsomeofthesefunds.Overthelast25years,theresponsibility
offundingtheseretirementaccountshasshiftedfromtheemployers(whooffereddefinedbenefit
planspromisingaspecificretirementincome)toemployees(whonowhavedefinedcontribution
plansthatarefinancedbytheirowncontributionsandnotalwaysmatchedbyemployers).
Permanent life insurance Generally,insurancethatcanstayinforceforthelifeoftheinsured
andaccruescashvalue,suchaswholelifeorendowment.Mayalsobereferredtoasordinarylife
insurance.
Policy Theprinteddocumentthatacompanyissuestothepolicyholder,whichstatesthetermsof
theinsurancecontract.
147Glossary
Policy dividend Arefundofpartofthepremiumonaparticipatinglifeinsurancepolicy,reflecting
thedifferencebetweenthepremiumchargedandactualexperience.
Policyholder/Policy owner Theownerofaninsurancepolicy,whomaybetheinsured,arelative
oftheinsuredsuchasaspouse,oranonnaturalpersonsuchasapartnershiporcorporation.
Policy illustration Adepictionofhowalifeinsurancepolicywillwork,showingpremiums,death
benefits,cashvalues,andinformationaboutotherfactorsthatmayaffectpolicycosts.
Policy loan Theamountapolicyholdercanborrowataspecifiedrateofinterestfromtheissuing
company,usingthe insurancepolicy’svalueascollateral. If thepolicyholderdieswiththedebt
partiallyorfullyunpaid,theinsurancecompanydeductstheamountborrowed,plusaccumulated
interest,fromtheamountpayabletobeneficiaries.
Policy reserves Thefundsthatalifeinsurancecompanyholdsspecificallyforfulfillingitspolicy
obligations.Reservesarerequiredbylawtobecalculatedsothat,togetherwithfuturepremium
paymentsandanticipatedinterestearnings,theyenablethecompanytopayallfutureclaims.
Preferred risk Apersonconsideredlessofariskthanthestandardrisk.
Premium Thepayment,oroneoftheperiodicpayments,thatapolicyholdermakestoownan
insurancepolicyorannuity.
Premium loan Apolicyloanforpayingpremiums.
Proportional reinsurance Aformofreinsuranceinwhichtheamountcededisdefinedatthe
pointtheriskistransferred,notatthepointofclaim.Theamountofriskmayvarywithtimeby
formula.
Q Qualified plan AnemployeebenefitplanthatmeetsInternalRevenueCoderequirements.Employer
contributionstosuchplansareimmediatelydeductible.Contributionstoandearningsinsuchplans
arenotincludedintheemployee’sincomeuntildistributedtotheemployee.Alsoknownastax-
qualifiedplan.
R Rated policy Aninsurancepolicyissuedatahigher-than-standardpremiumratetocoverextra
risk,aswhentheinsuredhasimpairedhealthorahazardousoccupation.Alsoknownasextra-risk
policy.
Reduced paid-up insurance Aformofinsuranceavailableasanonforfeitureoptionproviding
forcontinuationoftheoriginalinsuranceplanatareducedamount.
148 American Council of Life Insurers
Reinstatement Therestorationofalapsedinsurancepolicy.Thecompanyrequiresevidenceof
insurabilityandpaymentofpast-duepremiumsplusinterest.
Reinsurance Thetransferofsomeoralloftheinsurancerisktoanotherinsurer.Thecompany
transferring the risk iscalled thecedingcompany; thecompany receiving the risk iscalled the
assumingcompanyorreinsurer.
Reinsure Totransfertheriskofpotentiallossfromoneinsurertoanotherinsurer.
Renewable term insurance Terminsurancethatcanberenewedattheendoftheterm,atthe
policyholder’soptionandwithoutevidenceofinsurability,foralimitednumberofsuccessiveterms.
Ratesincreaseateachrenewalastheinsuredages.
Reserve Theamountrequiredtobecarriedasaliabilityonaninsurer’sfinancialstatementto
provideforfuturecommitmentsunderpoliciesoutstanding.
Retrocede Tocedeinsuranceriskfromonereinsurertoanotherreinsurer.
Retrocessionaire Areinsurerthatcontractuallyacceptsfromanotherreinsureraportionofthe
cedingcompany’sunderlyingrisk.Thetransferisknownasaretrocession.
Return-to-work program Aprogramthathelpspersonswithactivitylimitationsreturntowork.
Assistancemayinvolvemaximizingmedicalimprovementtodiminishtheeffectoflimitations,or
facilitatingjoborjob-siteaccommodations,retraining,orothermeansoftakingactivitylimitations
intoaccount.
Rider Anamendmenttoaninsurancepolicythatexpandsorrestrictsthepolicy’sbenefitsorexcludes
certainconditionsfromcoverage.Seeaccelerated deathbenefitandaccidental death benefit.
Risk-based capital (RBC) Method developed by the National Association of Insurance
Commissionerstomeasuretheminimumamountofcapitalthataninsurancecompanyneedsto
supportitsoverallbusinessoperations.RBCsetscapitalrequirementsthatconsiderthesizeand
degreeofrisktakenbytheinsurerandpresumesthatstakeholderswillstillreceivelimitedpayment
shouldinsolvencyoccur.RBChasfourcomponents:
Assetrisk Determinesanasset’sdefaultofprincipalorinterest,orfluctuationinmarketvalue,
asaresultofmarketchanges.
Creditrisk Measuresthedefaultriskonamountsduefrompolicyholders,reinsurers,orcreditors.
Underwritingrisk Calculatestheriskfromunderestimatingliabilitiesfrombusinessalreadywritten,
orinadequatelypricingcurrentorprospectivebusiness.
Off-balance-sheetrisk Measurestheriskfromexcessivegrowthrates,contingentliabilities,or
otheritemsnotreflectedonthebalancesheet.
149Glossary
Risk classification Theprocessbywhichacompanydecideshowitspremiumratesforlifeinsurance
shoulddifferaccordingtotheriskcharacteristicsofpersonsinsured—theirage,occupation,gender,
andhealthstatus,forexample—andhowtheresultingrulesareappliedtoindividualapplications.
Seeunderwriting.
Roth IRA Anindividualretirementaccount(IRA)inwhichearningsoncontributionsarenottaxed
atdistribution,aslongasthecontributionshavebeenintheaccountforfiveyearsandtheaccount
holderisatleastage591/2,disabled,ordeceased.ContributionstoaRothIRAarenottax-deductible.
S Self-insured plan Aretirementplanfundedthroughafiduciary—generallyabankbutsometimes
agroupofpeople—whichdirectlyinveststheaccumulatedfunds.Retirementpaymentsaremade
fromthesefundsastheyfalldue.Alsoknownastrusteedplanordirectlyinvestedplan.
Separate account Anassetaccountmaintainedindependentlyfromtheinsurer’sgeneralinvestment
accountandusedprimarilyforretirementplansandvariablelifeproducts.Thisarrangementpermits
widerlatitudeinthechoiceofinvestments,particularlyinequities.
Settlement options Theseveralways,otherthanimmediatepaymentincash,thatapolicyholder
orbeneficiarymaychoosetohavepolicybenefitspaid.Seesupplementary contract.
Standard risk Apersonpossessinganaveragelikelihoodofloss.
Stock life insurance company A life insurancecompanyownedby stockholderswhoelect
aboard todirect thecompany’smanagement.Stockcompaniesgenerally issuenonparticipating
insurance.
Straight life annuity Anannuitywhoseperiodicpayoutsstopwhentheannuitantdies.
Straight life insurance Wholelifeinsuranceonwhichpremiumsarepayableforlife.
Structured settlement Anagreementallowingapersonwhoisresponsibleformakingpayments
toaclaimanttoassigntoathirdpartytheobligationofmakingthosepayments.Anannuitycontract
isoftenusedtomakestructuredsettlementpayments.
Substandard risk A personwho cannotmeet the normal health requirements of a standard
insurancepolicy.Protectionisprovidedunderawaiver,specialpolicyform,orhigherpremium
charge.Alsoknownasimpairedrisk.
Supplementary contract Anagreementbetweenalifeinsurancecompanyandapolicyholder
orbeneficiaryinwhichthecompanyretainsthecashsumpayableunderaninsurancepolicyand
makespaymentsaccordingtothesettlementoptionchosen.
150 American Council of Life Insurers
Surplus Theremainderafteraninsurer’s liabilitiesaresubtractedfromit’sassets.Thefinancial
cushionthatprotectspolicyholdersincaseofunexpectedlyhighclaims.
T Term-certain annuity Anannuitywhichmakesperiodicpaymentsoverafixednumberofyears.
Seeannuity certain.
Terminal funded group plans Thereservesunderanannuitycontractforbenefitsaccumulated
outsideofthecontract,suchasunderadefinedbenefitretirementplanthathasbeenterminated.
Term insurance Insurancethatcoverstheinsuredforacertainperiodoftime,knownastheterm.
Thepolicypaysdeathbenefitsonlyiftheinsureddiesduringtheterm,whichcanbeone,five,ten
oreventwentyyears.
Third-party administrator Outsidegroupthatperformsadministrativefunctionsforaninsurance
company.
Title insurance Insurance that indemnifies real estateowners in caseclearownershipof the
propertyischallengedbythediscoveryoffaultsinthetitle.
Tort Alegaltermdenotingawrongfulactresultingininjuryordamageonwhichacivilcourt
actionorlegalproceedingmaybebased.
Total disability Theinabilityofapersontoperformallessentialfunctionsofhisorheroccupation,
orinsomecasesanyoccupation,duetoaphysicalormentalimpairment.
U Umbrella policy Coverage for losses beyond the limits of underlying property-casualty,
homeowners,orautoinsurancepolicies.Whiletheumbrellaappliestolossesoverthedollaramount
inunderlyingpolicies,coveragetermsaresometimesbroaderthanthosespecifiedintheunderlying
policies.
Unallocated contract Acontractunderwhichpremiumsandcontributionsaredepositedtoa
fund,ratherthanusedimmediately,topurchaseannuitiesforbenefitplanparticipants.
Underwriting Theprocessofclassifyingapplicantsforinsurancebyidentifyingsuchcharacteristics
asage,gender,health,occupation,andhobbies.Peoplewithsimilarcharacteristicsaregrouped
togetherandchargedapremiumbasedonthegroup’slevelofrisk.
Uninsurable risk Risksforwhichinsurancecoveragemaynotbeavailable.
Universal life insurance Atypeofpermanentlifeinsurancethatallowstheinsured,aftertheinitial
payment,topaypremiumsatvarioustimesandinvaryingamounts,subjecttocertainminimumsand
maximums.Toincreasethedeathbenefit,theinsurancecompanyusuallyrequiresthepolicyholder
tofurnishsatisfactoryevidenceofcontinuedgoodhealth.Alsoknownasadjustable life insurance.
151Glossary
V Variable annuity Acontractinwhichthepremiumspaidareinvestedinseparateaccountswhich
holdsfunds,includingbondandstockfunds.Theselectionoffundsisguidedbythelevelofrisk
assumed.Theaccountvaluereflectstheperformanceofthefundsthattheownerhaschosenfor
investment.
Variable life insurance Atypeofpermanentinsuranceprovidingdeathbenefitsandcashvalues
thatvarywiththeperformanceofaportfolioofinvestments.Thepolicyholdermayallocatepremiums
amonginvestmentsofferingvaryingdegreesofrisk,includingstocks,bonds,combinationsofboth,
andaccountsthatguaranteeinterestandprincipal.
Variable-universal life insurance Atypeofpermanentinsurancethatcombinesthepremium
flexibilityofuniversallifeinsurancewithadeathbenefitthatvariesasinvariablelifeinsurance.
Excessinterestcreditedtothecashvaluedependsontheinvestmentresultsofseparateaccounts
investinginequities,bonds,realestate,andothers.Thepolicyholderselectstheaccountstowhich
premiumpaymentsaremade.
Vesting Therightofanemployeetoalloraportionofthebenefitsheorshehasaccrued,even
ifemployment terminates.Employeecontributions,as ina401(k)plan,alwaysare fullyvested.
Employercontributionsvestaccordingtoascheduledefinedbytheplanandareusuallybasedon
yearsofservice.
Viatical settlement companies Lifeinsurancecompaniesthatpurchaselifeinsurancepolicies
atadiscountedvalue fromapolicyholderwho iselderlyor terminally ill.Thecompanies then
assumethepremiumpaymentsandcollectthefacevalueofthepolicyuponthedeathoftheperson
originallyinsured.
Void Whenaninsurancepolicyisfreedfromlegalobligationsforreasonsspecifiedinthepolicy
contract(ie.,apolicycouldbevoidedbyaninsurerifinformationgivenbyapolicyholderisproven
untrue).
W Waiver of premium Aprovisionthatsetsconditionsunderwhichaninsurancecompanywould
keepapolicyinfullforcewithoutthepaymentofpremiums.Thewaiverisusedmostfrequently
forpolicyholderswhobecometotallyandpermanentlydisabled.
Whole life insurance Themostcommontypeofpermanentlifeinsurance,inwhichpremiums
generallyremainconstantoverthelifeofthepolicyandmustbepaidperiodicallyintheamount
specifiedinthepolicy.Alsoknownasordinarylifeinsurance.
Workers compensation Insurancethatpaysformedicalcarerelatedtoon-the-jobinjuriesand
physicalrehabilitation.Workerscompensationhelpscoverlostwageswhileaninjuredworkeris
unabletowork.Statelawsvarywidelyonbenefitamountspaidandothercompensationprovisions.
153Historic Dates
HIStORIcdAteS (ASOfSePtemBeR2010)
1759 The first life insurance company in theUnited States—TheCorporation for Relief of Poor and
DistressedPresbyterianMinistersandofthePoorandDistressedWidowsandChildrenofPresbyterian
Ministers—isestablishedinPhiladelphiabytheSynodofthePresbyterianChurch.
1789 Professor Edward Wigglesworth of Harvard prepares a modified table of mortality based
onMassachusettsexperience,thefirstcomputationofpremiumsandreservesonascientificbasis
intheUnitedStates.
1794 TheInsuranceCompanyofNorthAmericaischarteredasthefirstgeneralinsurancecompanytosell
lifeinsuranceinAmerica.Infiveyears,onlysixpoliciesareissued,andthecompanydiscontinues
itslifeinsurancebusinessin1804.
1812 ThePennsylvaniaCompanyforInsuranceonLivesandGrantingAnnuitiesisincorporated,thefirst
corporationtobeorganizedinAmericasolelyforissuinglifeinsurancepoliciesandannuities.The
firstpolicyisissuedin1813.Thecompanydiscontinuesissuinglifepoliciesin1872.
1830 NewYorkLifeInsuranceandTrustCompany,thefirstAmericanlifeinsurancecompanytoemploy
agents,isstarted.Thecompanylaterdiscontinuesitslifeinsurancebusinessandsubsequentlyis
mergedwiththeBankofNewYork.
1835 AcharterisgrantedtoNewEnglandMutualLifeInsuranceCompanyofBoston—thefirsttoamutual
companyinAmerica.ThecompanybeginsoperatinginDecember1843.
1836 TheGirardLifeInsurance,AnnuityandTrustCompanyofPhiladelphiaisestablishedonthenew
principleofgrantingpolicyholdersparticipationinprofits.Thefirstpolicydividendsareallottedin
1844asadditionsofinsurancetopoliciesinforcethreeormoreyears.Initiallyastockcompany,
theinsurerlaterbecomesatrustcompany.
1840 TheNewYorkLegislaturepassesabillprovidingthattheproceedsofapolicymadeouttoawidow
asbeneficiarymustbepaidtoher,exemptfromcreditors’claims.Enactedintolaw,thismeasure
strengthenstheprotectivepoweroflifeinsurancepolicies.
1842 TheMutualLifeInsuranceCompanyofNewYorkischartered.Thecompany’sfirstpolicyisissued
February1,1843,markingthebeginningofmutuallifeinsuranceasitisknowntoday.
1848 Thefirstpolicyloansaregranted.
B
154 American Council of Life Insurers
1849 NewYorkpassesthefirstgeneralinsurancelaw.
1851 NewHampshireestablishesthefirstregulatorybodytoexaminetheaffairsofinsurancecompanies.
1853 Policyvaluationtables,whichElizurWrightdevelopedovernineyears,arepublished.
1857 NewYorkCityestablishesapensionfundforitspolicemen,thefirstpensionplancoveringstateor
localgovernmentemployees.
1859 NewYorkestablishesthefirststateinsurancedepartment.
1861 Massachusettsisthefirststatetorequirenonforfeiturevaluesaspartoflifepolicies.
ThefirstwarriskinsuranceiswrittenbylifeinsurancecompaniesduringtheCivilWar.
1864 TheManhattanLifeInsuranceCompanyisthefirstU.S.companytowriteanincontestableclause
intoapolicy.
1868 TheAmerican Experience Table ofMortality is published as part of aNewYork law. Covering
experience from1843 to 1858, it remains the tablemostwidelyusedbyAmerican companiesuntil
the1940s.
1869 TheU.S.SupremeCourtholdsinsurancenottobeatransactionincommerce,andaffirmsthevalidity
ofstateregulationofinsurance.
TheearliestorganizationoflifeinsuranceagentsisrecordedinChicago.
1871 ThefirstconventionofstateinsurancecommissionersisheldinNewYorkCity.
1873 ThefirstweeklypremiumpolicyisissuedintheUnitedStates.
1875 TheindustrialinsuranceagencysystemisintroducedintheUnitedStates.
ThefirstpensionplaninU.S.industryisestablishedbytheAmericanExpressCompany,financed
solelybytheemployer.
1880 Thefirstformalpensionplansupportedjointlybyemployerandemployeecontributionsisestablished
bytheBaltimore&OhioRailroadCompany.
CashsurrendervaluesarefirstestablishedbylawinMassachusetts.
1892 ColumbiaUniversityadoptsapensionplanforitsprofessors,thefirstprivatecollegeretirementplan,
effectiveatage65withaminimumof15years’service.
1893 ThefirstpensionplanforpublicschoolteachersisestablishedinChicago.
155Historic Dates
1901 CarnegieSteelCompanyestablishesthefirstenduringpensionplaninamanufacturingcompany.
Thisplan,withsomemodifications,istakenoverbytheUnitedStatesSteelCompanyin1911.
1905 ThefirstfunctioningtradeunionpensionplanisestablishedbytheGraniteCutters.Earliertrade
unionplans,setupbythePatternMakers(1900)andNationalAssociationofLetterCarriers(1902),
neverpaidbenefitsbeforedissolution.
TheArmstronginvestigationoflifeinsurancebytheNewYorkLegislatureresultsinmanychanges
ininsurancelaws.
1911 Thefirstgrouplifeinsuranceforemployeesisintroduced.
1917 Government-sponsoredlife insuranceforWorldWarIservicemenisofferedundertheWarRisk
InsuranceAct.ThisprogramsubsequentlybecomesknownasU.S.GovernmentLifeInsurance.
1920 CongresscreatestheFederalCivilServiceRetirementandDisabilityFund.
1921 MetropolitanLifeInsuranceCompanyissuesthefirstgroupannuitycontractintheUnitedStates.
TheRevenueActmakesemployercontributionstoprofit-sharingtruststax-exempt.Itsprovisions
areextendedtopensiontrustsin1926.
1928 Thefirstexaminationsareheldforcharteredlifeunderwriters.
1935 TheSocialSecurityActisenacted.
TheRailroadRetirementSystemisestablished.Itisamendedin1937tocreateaunifiedsystemfor
theindustry.
1939 ThetemporaryNationalEconomicCommitteebeginsaninvestigationofthelifeinsurancebusiness.
1940 CongressadoptstheNationalServiceLifeInsuranceAct,providinginsuranceformenandwomen
inserviceinWorldWarII.
1941 NewYorkformsthefirststateguarantyassociationmechanismforlifeandhealthinsurancecompanies.
1944 TheU.S.SupremeCourtholdsthatinsuranceiscommerce,andthatwhenconductedacrossstate
lines,itisinterstatecommerceandsubjecttofederallaws.
1945 TheMcCarran-FergusonActdeclaresthatstateregulationofinsuranceisinthepublicinterestand
grantsanexemptionfromantitrustlawstotheextentthatthebusinessisregulatedbystatelaw.
1949 TheU.S.SupremeCourtrulesthatemployersarerequiredtobargainonpensions.
156 American Council of Life Insurers
1952 TheCollegeRetirementEquitiesFundisestablishedasthefirstvariableannuityfund.
1954 TheParticipatingAnnuityLifeInsuranceCompanyoffersthefirstvariableannuitycontractstothe
generalpublic.
TheFederalEmployees’GroupLife InsuranceAct is introduced,providinggroup life insurance
andaccidentaldeathanddismembermentinsurancetocivilianofficersandemployeesoftheU.S.
governmentthroughprivateinsurancecompanies.
1959 Arkansasisthefirststatetopasslawspermittinglifeinsurancecompaniestoissuevariableannuities
andauthorizingtheestablishmentofseparateaccounts.
Early 1960s Most states now have laws specifically allowing life insurance companies to maintain separate
accounts, freeingpension fund investments fromsomeof the limitationsapplied tocompanies’
generalaccounts.
1962 H.R.10(KeoghAct),officiallyknownastheSelf-EmployedIndividualRetirementAct,isadopted.
1963–64 TheSecuritiesandExchangeCommissionrulesthatseparateaccountacquisitionsareanissuance
ofsecuritiessubjecttoregulationundertheSecuritiesAct,buttax-qualifiedgrouppensionplans,
includingvariableannuities,areexemptedfromtheact’sregistrationandprospectusrequirements.
1965 TheServicemen’sGroupLifeInsuranceActisintroduced,providingmembersonactivedutyinthe
uniformedserviceswithgrouplifeinsuranceunderwrittenbyprivateinsurersthroughacontract
withtheVeteransAdministration.
1974 TheEmployeeRetirementIncomeSecurityAct(ERISA)issignedintolaw.ERISAprimarilyprotects
thebenefitsofparticipantsinprivateplans,assuresreasonablevestingprovisions,andbroadens
theopportunitytosetupplansfortheself-employedandworkerswhohavenoprivateretirement
plans.
1976 ThefirstindividualvariablelifeinsurancepolicyisissuedintheUnitedStates.
1977 ThefirstuniversallifeinsurancepolicyisissuedintheUnitedStates.
1978 TheAgeDiscriminationinEmploymentActAmendmentsraisethemandatoryretirementagefrom65
to70formostprivate-sectorandstateandlocalgovernmentemployees,andeliminateitforfederal
employees.
1981 TheEconomicRecoveryTaxActissignedintolaw.Itallowsallworkerstoclaimtaxdeductions,
withinlimits,forretirementsavings;liberalizestaxdeductionsforretirementsavings,interest,and
dividendexclusions;andreducesoreliminatesestateandgifttaxesformostindividuals.
157Historic Dates
1982 TheTaxEquityandFiscalResponsibilityActrevisesthelifeinsurancecompanytaxationformula
andrepealstheuseofmodifiedcoinsuranceintaxcalculations;imposesapenaltytaxoncertain
annuitywithdrawals;placeslimitationsonpensionplanbenefits;andimposesadditionalrestrictions
oncertainplans.
1983 The U.S. Supreme Court decides in Arizona Governing Committee for Tax-Deferred Annuity and
Deferred Compensation Plans v. Norris that employee retirement benefits based on contributions
madeafterAugust1,1983,mustbecalculatedwithoutregardtotheemployee’sgender.
TheSocialSecurityAmendmentsincreaseSocialSecuritytaxesandmakeaportionofSocialSecurity
benefitstaxableforhigh-incomeretirees;limitcost-of-livingadjustmentsundersomecircumstances;
makenewfederalemployees,membersofCongress,thepresident,andotherfederalofficialssubject
toSocialSecuritytaxes;andgraduallyincreasetheretirementageto67by2027.
1984 TheRetirementEquityActlowerstheminimumageforvestingandparticipationinretirementplans;
requires the spouse’swritten consentbefore joint and survivor coveragemaybewaivedunder
pensionplans;andrequirespaymentofasurvivorannuityifavestedparticipantdiesbeforethe
annuity’sstartingdate.
TheTaxReformActsignificantlychangesthebasisonwhichlifeinsurancecompaniesaretaxed
andincludesuniversallifeinsurancewithinthedefinitionoflifeinsurance,preservingitspositive
taxtreatment.
1985 Montanabecomesthefirststatetoforbidgenderdiscriminationinthesettingofpremiumratesfor
alltypesofinsurance,effectiveOctober1.
1986 TheTaxReformActeliminatesthetaxdeductibilityofindividualretirementaccount(IRA)contributions
forhighlypaidpersonscoveredbypensionplans; reduces themaximumcontribution tosalary
reduction[401(k)]plans;andlimitsthedeductibilityofinterestpaidonloansagainstcorporate-owned
lifeinsurancepolicies.
1987 TheRevenueActestablishesfasterfundingrequirementsforunderfundedpensionplans,avariable-
ratePensionBenefitGuarantyCorp.premium,andalowerfull-fundinglimitationforqualifiedplans.
1988 TheTechnicalandMiscellaneousRevenueActcreatesanewclassoflifeinsurancecontract—inwhich
policyloansandsurrenderpaymentsaresubjecttotaxationsimilartothatofdeferredannuities—and
increasestheexcisetaxonexcesspensionassetsuponterminationofqualifiedplans.
1990 Asignificantfederaltaxisimposedonlifeinsurers’deferredacquisitioncosts.Itbecomesknown
astheDACtax.
1991 All50statesandPuertoRiconowhavelifeandhealth insurancecompanyguarantyassociation
mechanisms.
158 American Council of Life Insurers
1993 TheOmnibusBudgetReconciliationActreducestheamountofannualcompensationforcalculating
retirementbenefitsto$150,000from$235,840.
InJohn Hancock v. Harris Trust and Savings Bank,theU.S.SupremeCourtrulesthatcertainassetsinJohn
HancockLifeInsuranceCompany’sgeneralaccountare“planassets”andthatthecompany’sactions
regardingtheirmanagementanddispositionmustbejudgedagainstERISA’sfiduciarystandards.
1995 InNationsBank v. Variable Annuity Life Insurance Company,theU.S.SupremeCourtrulesthatannuities
arenotaformofinsuranceundertheNationalBankAct,effectivelyallowingnationalbankstosell
annuitieswithoutlimitation.
TheInternalRevenueServicestatesinproposedregulationsthatbank-issued,hybridCD-annuities
aretaxabletopurchasers.
1996 TheSmallBusinessJobProtectionAct(SBA)amendsERISAtoclarifytheU.S.SupremeCourt’sdecision
inJohnHancockv.HarrisTrustandSavingsBankandprotectinsurersfromlawsuitsbroughtfor
pastactionstakeningood-faithrelianceongovernmentrules.SBAalsocontainsawidevarietyof
pensionsimplificationprovisionsandcreatesanewSIMPLEplanforsmallemployers.
TheHealthInsurancePortabilityandAccountabilityAct(HIPAA)clarifiesthetaxtreatmentoflong-
termcareandaccelerateddeathbenefits.HIPAApermitsqualifiedlong-termcare insuranceand
servicestobetreatedlikeaccidentandhealthinsurancefortaxpurposes,andtreatsaccelerated
deathbenefitspaidtoterminallyandchronicallyillindividualsasamountspaidbyreasonofthe
deathoftheinsuredunderalifeinsurancecontract.
1997 TheFinancialServicesAgreementoftheGeneralAgreementonTradeinServiceslocksinliberalization
measuresincrucialworldmarkets.Itsframeworkreducesoreliminatesgovernmentbarriersthat
eitherpreventfinancialservicesfrombeingfreelyprovidedacrossnationalbordersordiscriminate
againstfirmswithforeignownership.
TheSavingsAreVitaltoEveryone’sRetirementActdirectstheU.S.DepartmentofLabortomaintain
anongoingprogramofpublicinformationandoutreachtopromoteretirementsavings.
Section408AoftheTaxpayerReliefAct,beginningJanuary1,1998,createstheRothIRA,inwhich
contributionsarenotdeductiblebutqualifieddistributionsareexcludedfromgrossincome.
The mutual insurance holding company becomes an increasingly popular option to total
demutualization.Itallowsmutualinsurerstoreorganizeintoaholdingcompanyandawhollyowned
stocksubsidiaryoranintermediatestockholdingcompany,andmoreeasilyobtaincapitalthrough
aninitialpublicoffering.
159Historic Dates
1998 TheInsuranceMarketplaceStandardsAssociation(IMSA)islaunched.Thevoluntarymembership
organizationpromoteshighethicalstandardsinthesaleofindividuallifeinsuranceandindividual
annuityproductsthroughIMSA’sPrinciplesandCodeofEthicalMarketConduct.
1999 TheGramm-Leach-BlileyFinancialServicesModernizationActeliminateslawsenactedduringtheDepression
torestrictaffiliationsamonginsurers,banks,andsecuritiesfirms.Theactclarifiesthatinsuranceregulators
overseetheinsuranceactivitiesofallfinancialinstitutionsandprohibitsinsuranceunderwritinginbank
operatingsubsidiaries.Thenewlawalsopreventsbankingregulatorsfromunilaterallybroadeningbanks’
insurancepowersorcircumventingthestateinsuranceregulatorysystem;requiresfederalcourtstogrant
equaldeferencetofederalandstateregulatorsinresolvinginsurancedisputes;andpermitsamutuallife
insurertorelocateifitsstatefailstoenactamutualholdingcompanylaw.
The National Association of Insurance Commissioners (NAIC) amends life risk-based capital
requirementsformodifiedcoinsurancereinsurancetransactions,allowinglifeinsurersandreinsurers
tomoreaccuratelyreflectriskexposure.ACLIandstateregulatorsalsocompleteyearsofnegotiations
overthecontentandapplicationofinformalguidingprinciplesforregulatorsevaluatingreinsurance
transactions.
TheInternalRevenueServiceissuesanupdatedmortalitytablethatlowersthetaxrateforgroup
termlifeinsurance.NewIRSrulesalsopermittheconversionoftraditionalIRAannuitiestoRoth
annuitieswithouttheinsurerissuinganewcontract,reducingpolicyholdercostsandadministrative
burdens.
2000 TheLong-TermCareSecurityActissignedintolaw,allowingcurrentandretiredfederalemployees
andactiveandretiredmilitarypersonnel,aswellastheirfamilies,toobtainlong-termcareinsurance
asaself-fundedbenefit.
TheElectronicSignaturesinGlobalandNationalCommerceActensuresthatlifeinsurersandtheir
customerscantransactbusinessovertheInternetbysettingnationalstandardsandmakingelectronic
signaturesandrecordslegallybinding.
LegislationgrantingpermanentnormaltraderelationstoChinaisenacted,settingthestageforChina’s
accessiontotheWorldTradeOrganization.
2001 TheEconomicGrowthandTaxReliefReconciliationAct,containingpensionreformmeasuresand
retirementsavingincentives,issignedintolaw.Theactraisesthelimitsoncontributionsto401(k)-
typeretirementplansandIRAs,andindexesthelimitsforinflation;allowsthose50andoldertomake
additionalcatch-upcontributionsto401(k)-typeplansandIRAsannually;shortensvestingschedules
for401(k)plans;easesrulesonrollingoverretirementsavingsamongprivate-sector,public-sector,
andnonprofits’plans;andreducesadministrativerequirementsforsmallbusinessesthatsetupand
maintainretirementplans.
TheUSAPatriotActissignedintolaw,requiringlifeinsurersandotherfinancialinstitutionstoestablish
anti-money-launderingprogramswithinternalproceduresandcontrols,adesignatedcompliance
officer,ongoingemployeetraining,andindependentaudits.
160 American Council of Life Insurers
2002 TheVictimsofTerrorismTaxReliefAct is enacted,protecting life insurers that issue structured
settlementannuitiesfromadversetaxtreatmentwhenabeneficiarytransfersthestreamofincome
fromsuchanannuitytoathirdparty.
Taxdeferralforinvestmentincomeofforeignlifeinsurancesubsidiaries(SubpartF)isextended
forfiveyearsandSection809oftheInternalRevenueCode(themutualcompanyadd-ontax)is
suspendedforthreeyearsaspartofaneconomicstimuluspackagethatissignedintolaw.
Congressapproves tradepromotionauthority for thepresident,helping toexpand international
marketsforlifeinsurersbyauthorizingnegotiationoftradedealsthatCongresscanapproveorreject
butnotamend.
NAICadoptsupdatedmortalitytablesonwhichlifeinsurancevaluationisbased,reflectingAmericans’
greaterlongevityandreducinginsurers’reserverequirements.Uponadoptioninthestates,the2001
CSOtableswillreplaceaversionineffectsince1980.
2003 NAICrevises theStandardNonforfeitureLawfor IndividualDeferredAnnuities topermituseof
anindexedinterestrateduringlow-interest-rateeconomicperiods,eliminatingtheneedforstate
legislaturestoreactivelyapproveratemodificationseachyear.Thelawreplacesthefixed3percent
minimumnonforfeitureinterestratewithonebasedonthefive-yearConstantMaturityTreasuryRate
andcappedat3percent.
CongresspassesandthePresidentsignsintolawH.R.2738,theU.S.-ChileFreeTradeAgreement,
andH.R.2739,theU.S.-SingaporeFreeTradeAgreement.Theagreements,settotakeeffectJanuary
1,2004,establishfreetradeaccordswithbothcountriesforthefirsttime.Theyprovideaccessto
thesemarketsforU.S.insurance,pension,andretirementsecurityproviders.
NAICadoptstheSeniorProtectioninAnnuityTransactionsModelLaw.
CongressapproveslegislationthatmakespermanentanumberofpreemptionsintheFairCredit
ReportingAct(FCRA).Theseincludeprovisionsoninformationsharingamongaffiliates,prescreening,
andaccess and correction.Thebill also containsmeasuresprotecting insurance-relatedusesof
medicalinformation.
2004 IRSissuesNotice2004-15,whichprovidesguidanceregardingdistributionsfromnonqualifiedannuities.
Underthenewguidance,policyholdersofnonqualifiedannuitieswillhavemoreflexibilityintaking
distributionswithoutincurringadditionaltaxes.
CongresspassesandthePresidentsignsthePensionFundingEquityActof2004.Thebillestablishes
a two-year temporary replacement for the 30-year Treasury interest rate andbecomes effective
January1,2005.Includedinthebillisapermanentrepealofsection809ofthetaxcode,which
affectsmutuallifeinsurancecompanies.
161Historic Dates
2005 Commissioners’ 2001 Standard Ordinary Mortality Tables, (2001 CSO Tables), which had been
previouslyadoptedbytheNAIC,wereadoptedbyamajorityofthestates,thusputtingthemin
effectforstateregulatorypurposes.Thesenewtablesreplacethe1980CSOTables.
2006 Interstate Insurance Product Regulation Compact Commission was created to develop uniform
standardsforinsuranceproducts,toprovideacentralclearinghouseforregulatoryreviewandto
enhancecooperationandcoordinateeffortsbetweenstateinsurancedepartments.
PensionProtectionActof2006wassignedintolawbyPresidentBush,strengtheningthefederal
pensioninsurancesystemandexpandingopportunitiesforAmericanstoachieveasecureretirement.
The legislationmakes permanent increased contribution limits to 401(k)s and IRAS; establishes
defined-contributionauto-enrollment;encouragesannuitiesaspayoutoptionsinemployer-sponsored
retirementplans;andpermitsthecombinationoflong-termcareinsuranceandannuities.
NationalInsuranceActof2006,creatingan“optionalfederalcharterregulatorysystem”forinsurers,
wasintroducedintheSenate.Thislegislationwouldallowinsurersandinsuranceproducers,agents
andbrokerstoelectfederalorstateregulation,chartersandlicenses.
2007 NationalInsuranceActof2007wasreintroducedintheSenateandHR3200,acompanionbillwas
introducedintheHouse.Thislegislationallowsforan“optionalfederalcharter”forinsurers.
2008 TheUnitedStatesTreasuryDepartmentrecommendscreatinganoptionalfederalcharterforinsurance
regulation,citingbenefitsofreducedregulatorycostsandenhancedmarketplacecompetition.
Iowabecomesthefirststateinthenationtoparticipateinanindustry-initiatedprojectaimedat
providingbetter,moreunderstandabledisclosureoffeatures,feesandchargesrelatingtofixedand
indexedannuities.
Twelvestatesapprovelegislationtoprotectseniorcitizensfromstranger-originatedlifeinsurance
(STOLI) in which financial speculators misuse life insurance in order to profit from seniors’
deaths.
InterstateInsuranceProductRegulationCommissionhas33statesparticipating,representingover
50%oftheinsurancepremiumsforlife,annuities,disabilityincomeandlongtermcareinsurance
products.TheCommissionhasreviewedits100thfiling,andthefollowingstandardsareavailable
forfilingwiththeIIPRC:34individuallifestandardsand9annuitystandardsthatincludeallthe
variableandnon-variable,deferredandimmediate,products.Thereare13rulesadopted.
LongTermCarePartnershipPrograms.SincetheenactmentoftheDeficitReductionActin2005,19
stateshaveimplementedprogramsand8arepoisedtobecomeoperationalbytheendoftheyear.
Asaby–productofimplementation,thestatesthatneveradoptedthe2000and2006updatestothe
NAICModelActandRegulationhavenowdoneso.
162 American Council of Life Insurers
2009 Sixteenmorestatesapprovelegislationtoprotectseniorcitizensfromstranger-originatedlifeinsurance
(STOLI)inwhichfinancialspeculatorsmisuselifeinsuranceinordertoprofitfromseniors’deaths.
Inall,anti-STOLIlegislationhasbeenenactedin28states.
Congressworksthroughlate2009(andat2009FactBookdeadline)onfinancialservicesreform,
includinglifeinsurersandproducersinvariousproposals.Oneproposalwouldestablishaninsurance
officewithinTreasuryDepartmentthatwouldcollectinsurancedata,adviseTreasuryoninsurance
mattersandnegotiateinternationalregulatoryagreements.
ThreemorestatesjointheInterstateCompactCommission.Thirtysixstatesinallparticipateinthe
state-basedefforttospeedproductapprovals.
Sixmore states establish Long-TermCarePartnerships,with 31 in all participating in thepublic-
privateprogramdesignedtohelpstatessaveonMedicaidexpensesbyencouragingpeopletouse
long-termcareinsurancetocoveratleastsomeoftheirlong-termcareneeds.
Aspartoftheefforttomodernizeinsurerreserverequirements,theNAICpassesitsrevisedModel
StandardValuationLaw,amodellawdesignedtoguidestatesontheminimumreservesneededfor
lifepoliciesandannuitycontracts.Thenewmodellawisneededtoadoptaprinciple-basedreserve
system,andallowstheNAICtomaintainaValuationManual(yettobecompleted)thatincludesthe
valuationmethodologiesforalllifeandhealthinsuranceproducts.
Asaprecursortotheimplementationofprinciple-basedreserves,andinreactiontothefinancial
crisis,theNAICandtheindividualstatesmakeadjustmentstocertainminimumreserve,risk-based
capital,andaccountingrequirements.
2010 TheWallStreetReformandConsumerProtectionAct(Dodd-FrankAct)issignedintolawcreatinga
newFederalInsuranceOfficewithintheDepartmentofTreasury.TheFederalInsuranceOfficewill
beresponsibleforunderstandingandadvisingCongressandtheadministrationoninsurance-related
issuesandhelpingnegotiateinternationalregulatoryequivalencyagreements.
163Organizations
LIfeInSuRAnceReLAtedORGAnIZAtIOnS (ASOfSePtemBeR2010)
nAmerica’s Health Insurance Plans (AHIP) 601PennsylvaniaAvenue,NW SouthBuilding,Suite500 Washington,DC20004 (202)778–3200 www.ahip.org Chairman:VickyB.Gregg President&CEO:KarenIgnagni
AHIPisatradeassociationrepresentingcompaniesthatfinanceanddeliverhealthcareand provideotherhealthinsuranceproductsandservices.
n American Academy of Actuaries 1850MStreet,NW,Suite300 Washington,DC20036 (202)223–8196 www.actuary.org President:MaryFrancesMiller ExecutiveDirector:MaryDowns
Theacademyisapublicpolicyandcommunicationsorganizationrepresentingactuariesinallpracticespecialties.Providesliaisonwithfederalandstategovernments,relationswithotherprofessions,disseminationofpublicinformation,anddevelopmentofstandardsofprofessionalconduct.DevelopsstandardsofpracticethroughtheActuarialStandardsBoard,anindependentbodywithintheacademy.ConsistslargelyofmembersoftheCasualtyActuarialSociety,ConferenceofConsultingActuaries,SocietyofActuaries,andactuariesenrolledunderERISA.Membershipcriteriaincludeexperienceandeducationstandards.
n The American College270S.BrynMawrAvenue
BrynMawr,PA19010 (610)526–1000 www.theamericancollege.edu PresidentandChiefExecutiveOfficer:LaurenceBarton
TheCollegeoffersprofessionalcertificationandgraduatedegreedistance-educationtothose seekingcareergrowthinfinancialservices.OffersstudiesthroughtheS.S.HuebnerSchool leadingtotheawardofCharteredLifeUnderwriter(CLU),CharteredFinancialConsultant (ChFC),RegisteredHealthUnderwriter(RHU),andRegisteredEmployeeBenefitsConsultant (REBC)diplomasandprofessionaldesignations.GrantsaMasterofScienceinFinancial ServicesdegreethroughtheGraduateSchoolofFinancialSciences,andaMasterof ManagementdegreethroughtheRichardD.IrwinGraduateSchoolofManagement.Accredited bytheMiddleStatesAssociationofCollegesandSchools’CommissiononHigherEducation.
C
164 American Council of Life Insurers
nAmerican Council of Life Insurers (ACLI) 101ConstitutionAvenue,NW,Suite700 Washington,DC20001–2133 (202)624–2000 www.acli.com Chairman:MichaelD.Fraizer(GenworthFinancial)(thruOctober2011) Chairman-Elect:TheodoreMathas(NewYorkLifeIns.Co.) PresidentandChiefExecutiveOfficer:DirkA.Kempthorne
ACLIrepresentsthelifeinsuranceindustryinlegislativeandregulatoryareasatthefederaland statelevelsofgovernment.Providesinformationaboutthepurposeandusesoflifeinsurance, maintainsresearchfacilitiestorecordtheperformanceofthebusiness,andmeasuresattitudes onissuesrelevanttotheindustry.
n American Risk and Insurance Association (ARIA) 716ProvidenceRoad Malvern,PA19355–3402 (610)640–1997 www.aria.org President:GeneLai President-Elect:DavidSommer
ARIAisasocietyofinsuranceeducatorsandothersinterestedinriskandinsuranceeducation andresearch.
n American Society of Pension Professionals & Actuaries (ASPPA) 4245N.FairfaxDrive,Suite750 Arlington,VA22203 (703)516–9300 www.asppa.org President:SheldonH.Smith President-Elect:ThomasJ.Finnegan
ASPAeducatespensionactuaries,consultants,administrators,andotherbenefitsprofessionals, andpreservesandenhancestheprivatepensionsystemindevelopingacohesiveandcoherent nationalretirementincomepolicy.Offersanexaminationprogramforemployeebenefits professionalsandrepresentstheinterestsofitsmembersbeforeappropriateforums.
n Association of Home Office Underwriters (AHOU) 2300WindyRidgeParkway,Suite600 Atlanta,GA30339 (770)984–3715 www.ahou.org
President:EverettW.Kunzelman
ExecutiveVicePresident:MaureenLeydon
ThemissionoftheAHOUistoadvancetheknowledgeofsoundunderwritingoflifeand disabilityinsurancerisks,towardwhichenditholdsmeetings,publishespapersand discussions,andpromoteseducationalprograms.Theassociationalsoprovidesvaluable informationsharingandnetworkingopportunitiestoitsmembers.
165Organizations
n Conference of Consulting Actuaries 3880SalemLakeDrive,SuiteH LongGrove,IL60047–5292 (847)719–6500 www.ccactuaries.org President:LawrenceJ.Sher President-Elect:AdamJ.Reese
The conference advances the quality of consulting practice, supports the needs of consultingactuaries,andrepresentstheirinterests.Comprisesconsultingactuariesinalldisciplines.
n Consumer Credit Industry Association (CCIA) 6300PowersFerryRoad,Suite600-286 Atlanta,GA30339 (312)939–2242 www.cciaonline.com Chair:ReedGass President:MichaelJones
CCIAisanational tradeorganizationfor insurers thatunderwriteconsumercredit insurance intheareasof life,accidentandhealth,property,andinvoluntaryunemployment insurance.Actstopreserve,promoteandenhancetheavailability,utility,andintegrityofinsuranceandrelatedproductsandservicesdeliveredinconnectionwithfinancialtransactions.
n Financial Services Roundtable 1001PennsylvaniaAvenue,NW,Suite500South Washington,DC20004 (202)289–4322 www.fsround.org PresidentandCEO:SteveBartlett
Theroundtableisaforumforfinancialindustryleaderstoshareinformationandinformpublic policywithmattersrelatingtothefinancialservicesindustry.
n The Griffith Insurance Education Foundation 623HighStreet Worthington,Ohio43085 (614)880–9870 www.griffithfoundation.org Chairman:JohnJ.Bishop President:DonaldJ.Rebele
Thefoundationwasfoundedatamajormid-westernuniversitytodevelopandsupport aninsuranceandriskmanagementprogram.Itpromotestheteachingofriskmanagement andinsurancebycolleges,universities,andotherinstitutionsofhigherlearning,andstudent participationintheseprograms,andofferseducationprogramsforpublicpolicy-makerson
managingrisksthroughinsurancemechanisms.
n Health Insurance Association of America (HIAA)SeeAmerica’sHealthInsurancePlans(AHIP).
166 American Council of Life Insurers
n Insurance and Financial Communicators Association (IFCA) P.O.Box27018 75DundasStreet Cambridge,Ontario,CNN1R8H1 (519)629-3540 www.ifcaonline.com President:NormanQuesnel VicePresident:ThomasZimmermann
IFCAisaninternationalorganizationdedicatedtotheongoingprofessionaldevelopmentofitsmembersinlifeinsuranceandrelatedfinancialservicescommunications.Theassociationoperatesonavolunteerbasisandoffersprogramsandactivitiesforitsmembers.IFCA’sprimaryobjectiveistoencourageandpromotetheexchangeofexperienceandideasthroughanextensiveprogramofformalschools,workshops,seminars,newsletters,researchstudies,networking,internationalawardscompetition,andmeetings.
n Insurance Accounting and Systems Association (IASA) IASAInternationalOffice 3511ShannonRoad,Suite160 Durham,NC27707 (919)489–0991 www.iasa.org President:CraigLowenthal
IASAworkstoenhanceindividual,organizational,andindustryeffectivenessbyfacilitatingtheexchangeofinformationandideasamonginsurance-relatedprofessionals.
n Insurance Information Institute (III) 110WilliamStreet NewYork,NY10038 (212)346–5500 www.iii.org President:RobertP.Hartwig
ThemissionofIIIistoimprovepublicunderstandingofinsurance.IIIprovidesdefinitiveinsuranceinformationandstatisticsforgovernment,media,educationalinstitutions,andthepublic.
n Insured Retirement Institute (IRI) 1101NewYorkAvenue,NW,Suite825 Washington,DC20005 (202)469-3000 www.irionline.org PresidentandCEO:CatherineJ.Weatherford
Withover350members,IRIrepresentsallsegmentsoftheannuityandvariablelifeindustry. Itservesasaforumfortheexchangeofinformation,andprovidesthepublic,media,and
industrywithinformationonthebenefitsofannuitiesandrelatedproducts.
167Organizations
n International Claim Association (ICA) 115515thStreet,NW,Suite500 Washington,DC20005 Phone:(202)452–0143 www.claim.org President:MarlonD.Nettleton President-Elect:AntoinetteMortensen
ICAiscomposedoflifeandhealthinsurancecompanyofficersandemployeeswhohandletheircompanies’claimsfunction.
n Life Communicators AssociationSeeInsuranceandFinancialCommunicatorsAssociation(IFCA).
n Life Insurers Council (LIC) 2300WindyRidgeParkway,Suite600 Atlanta,GA30339 (770)984–3724 www.loma.org ExecutiveDirector:JeffreyS.Shaw
AcouncilofLOMA,LICisanassociationofinsurancecompaniesthatservethebasicinsuranceneedsofthegeneralpublic,includingtheunderservedmarket,throughvariousdistributionmethodsbypromotingstandardsofbusinessconductwhichareinthebestinterestsofpolicyholders;representingitsmembersbyaddressinglegislative,regulatoryandconsumerissues;andpromotingtheinterchangeofexperienceandideasforthebettermentofthepublicandtheinsuranceindustry.
n LIMRA International, Inc. 300DayHillRoad Windsor,CT06095–4761 Headquarters:(860)688–3358 CustomerService:(800)235–4672(NorthAmerica) www.limra.com PresidentandChiefExecutiveOfficer:RobertA.Kerzner
LIMRAisamember-ownedorganizationdedicatedtomeetingthemarketinginformationneedsofcompaniesinvolvedinmarketingannuity,disability,health,life,mutualfund,andretirementsavingsproducts.LIMRAworkstoimprovetheefficiencyoflifeinsurancedistributionthroughscientificmanagementmethods,servesas theprincipalsourceof industrysalesandmarketingstatistics,conductsresearch,providesconsultingandmanagementeducationalservices,andpreparesawiderangeofpublications.
n LOMA (Life Office Management Association) 2300WindyRidgeParkway,Suite600 Atlanta,GA30339–8443 (770)951–1770 www.loma.org PresidentandChiefExecutiveOfficer:RobertA.Kerzner
Aninternationalassociationthroughwhichmorethan1,200insuranceandfinancialservicescompaniesfromover80countriesengageinresearchandeducationalactivitiestoimprovecompanyoperations.Membersareinvolvedinlifeandhealthinsurance,managedcare,annuities,pensions,banking,securities,andotherfinancialservicesareas.LOMAiscommittedtoworkingaspartnerswithmembersworldwidetoimprovemanagementandoperationsthroughqualityemployeedevelopment,research,informationsharing,andrelatedproductsandservices.
168 American Council of Life Insurers
n MIB Group, Inc. 50BraintreeHillPark,Suite400 Braintree,MA02184–8734 (781)751-6000 www.mib.com Chairman:SusanD.Waring CEO:JamesF.Cook
FormerlytheMedicalInformationBureau,MIBisanonprofitassociationfoundedbymedicaldirectorstoprovideacentralinformationexchangeformorethan600memberlifeinsurancecompanies.
n MDRT 325W.TouhyAvenue ParkRidge,IL60068–4265 (847)692–6378 www.mdrt.org President:JulianH.Good,Jr FirstVicePresident:JenniferA.Borislow
MDRT(formerlyMillionDollarRoundTable)iscomposedoflifeinsuranceagentswhoconsistentlysellapredeterminedamountoflifeinsuranceannuallyandmaintainmembershipintheNationalAssociationofInsuranceandFinancialAdvisors.
n National Association of Insurance Commissioners (NAIC) 2301McGeeStreet,Suite800 KansasCity,MO64108–2662 (816)842–3600 www.naic.org President:JaneL.Cline
NAICisanorganizationofstateinsuranceregulatorsfromthe50states,theDistrictofColumbiaandthefourU.S.territories.NAICfunctionsasaregulatorysupportorganizationandservesthepublicinterestbypromotinguniformityoflegislationandregulation,facilitatingthefairandequitabletreatmentofinsuranceconsumers,promotingthereliability,solvencyandfinancialsolidityofinsuranceinstitutions,andsupportingandimprovingstateregulationofinsurance.
n National Association of Insurance and Financial Advisors (NAIFA) 2901TelestarCourt FallsChurch,VA22042–1205 (877)866–2432 www.naifa.org President:TerryK.Headley,LUTCF,LIC,FSS ChiefExecutiveOfficer:SusanD.Waters,DM,CAE
NAIFAisanationalnonprofitorganizationrepresentingtheinterestsofmorethan70,000insuranceandfinancialadvisorsnationwide,throughitsfederationofover900stateandlocalassociations.NAIFAisthenation’slargestfinancialservicesmembershipassociation.Promoteshighethicalstandards,supportslegislationintheinterestofpolicyholdersandagents,participatesincommunityservice,andprovidesagenteducationseminarsandsalescongresses.
169Organizations
n National Association for Variable Annuities (NAVA) SeeInsuredRetirementInstitute(IRI)
n National Fraternal Congress of America (NFCA) 1301West22ndStreet,Suite700 OakBrook,IL60523 (630)522–6322 www.nfcanet.org Chairman:MarkD.Theisen Vice-Chair:StuartB.Buchanan
NFCAistheassociationandvoiceoffraternalbenefitsocieties,whichprovideseducation,
guidance,standards,andinformationonbestpracticesandgovernance.
n National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) 13873ParkCenterRoad,Suite329 Herndon,VA20171 (703)481–5206 www.nolhga.com Chairman:StevenS.Lobell Vice-Chair:JohnR.Mathews
NOLHGAisavoluntaryassociationcomprisedofthelifeandhealthinsuranceguaranty associationsofall50states,theDistrictofColumbia,andPuertoRico.Thisnonprofit organizationassistsitsmembersinhandlingmulti-stateinsolvencies,coordinatestheirresolution, andprovidesaforumforresolvingissuesandproblemsrelatedtotheoperationofstatelifeand healthinsuranceguarantyassociations.
n Society of Actuaries (SOA) 475N.MartingaleRoad,Suite600 Schaumburg,IL60173 (847)706–3500 www.soa.org
President:S.MichaelMcLaughlin
SOAisanorganizationofskilledprofessionalsapplyingmathematicalandeconomic probabilitiestofinancialsecurityprograms.Educatesandqualifiescandidatestobecome members,providescontinuingeducationandprofessionaldevelopmentprograms,promotes andpublishesactuarialresearch,andmaintainsandenforcesaprofessionalconductcodeforits members.Determinesmembershipbysuccessfulcompletionofarigoroussetofexaminations leadingtothedesignationofAssociateorFellowinthesociety.
170 American Council of Life Insurers
n Society of Financial Service Professionals (SFSP) 19CampusBoulevard,Suite100 NewtownSquare,PA19073–3230 (610)526–2500 www.financialpro.org President:R.CliffordBerg,Jr.
President-Elect:ThomasL.Petsche
SFSPisanorganizationofprofessionalswhohaveearneddesignationsinthefieldsofinsurance andfinancialservices.Comprisesagents,companyexecutives,insuranceregulators,educators, attorneys,certifiedpublicaccountants,andbanktrustofficers,whoparticipateinlocalchapters.
n S.S. Huebner Foundation for Insurance Education WhartonSchooloftheUniversityofPennsylvania 3000Steinberg-DietrichHall 3620LocustWalk Philadelphia,PA19104–6302 (215)898–9631 http://sshuebner.org
ExecutiveDirector:KentSmetters
Thefoundation’smissionistostrengtheninsuranceeducationattheuniversitylevelby increasingthenumberofprofessorsspecializingininsurance.Thefoundationmakesfellowship grantsfordoctoralstudyandpublishesresearchstudiesinthefieldofinsurance.
171State Insurance Officials
StAteInSuRAnceOffIcIALS (ASOfSePtemBeR2010)
n Alabama JimL.Ridling CommissionerofInsurance AlabamaDepartmentofInsurance P.O.Box303351 Montgomery,AL36130–3551 (334)269–3550 www.aldoi.gov
nAlaska LindaS.Hall DirectorInsurance DepartmentofCommunityandEconomic Development AlaskaDivisionofInsurance 9thFloorStateOfficeBuilding 333WilloughbyAvenue Juneau,AK99811 (907)465–2515 www.commerce.state.ak.us/insurance
nArizona ChristinaUrias DirectorofInsurance ArizonaDepartmentofInsurance 2910N.44thStreet,Suite210 Phoenix,AZ85018–7256 (602)364–3100 www.id.state.az.us
nArkansas JayBradford InsuranceCommissioner ArkansasInsuranceDepartment 1200WestThirdStreet LittleRock,AR72201-1904 (501)371–2600 http://insurance.arkansas.gov
nCalifornia StevePoizner InsuranceCommissioner CaliforniaDepartmentofInsurance ConsumerServicesDivision 300CapitolMall,Suite1600 Sacramento,CA95814 (916)492–3545 www.insurance.ca.gov
nColorado MarcyMorrison InsuranceCommissioner ColoradoDivisionofInsurance 1560Broadway,Suite850 Denver,CO80202 (303)894–7499 www.dora.state.co.us/insurance
nConnecticut ThomasR.Sullivan InsuranceCommissioner StateofConnecticutInsuranceDepartment 153MarketStreet,7thFloor Hartford,CT06103 (860)297–3800 www.ct.gov/cid
nDelaware KarenWeldinStewart InsuranceCommissioner StateofDelawareDepartmentofInsurance 841SilverLakeBoulevard Dover,DE19904 (302)674–7300 www.delawareinsurance.gov
D
172 American Council of Life Insurers
n District of Columbia GennetPurcell Commissioner GovernmentoftheDistrictofColumbia DepartmentofInsurance,SecuritiesandBanking 810FirstStreet,NE,Suite701 Washington,DC,20002 (202)727–8000 www.disb.dc.gov
nFlorida KevinM.McCarty Commissioner FloridaOfficeofInsuranceRegulation TheLarsonBuilding 200EastGainesStreet Tallahassee,FL32399 (850)413–3140 www.floir.com
nGeorgia JohnW.Oxendine InsuranceCommissioner InsuranceandSafetyFireCommissioner’sOffice TwoMartinLutherKing,Jr.Drive WestTower,Suite704 Atlanta,GA30334 (404)656–2070 www.gainsurance.org
nHawaii GordonI.Ito InsuranceCommissioner HawaiiInsuranceDivision KingKalakauaBuilding 335MerchantStreet,Room213 Honolulu,HI96813 (808)586–2790 www.hawaii.gov/dcca/ins
n Idaho WilliamW.Deal DirectorofInsurance IdahoDepartmentofInsurance 700WestStateStreet P.O.Box83720 Boise,ID83720 (208)334–4250 www.doi.idaho.gov
n Illinois MichaelT.McRaith DirectorofInsurance IllinoisDepartmentofFinancialandProfessional Regulation DepartmentofInsurance 320W.WashingtonStreet
Springfield,IL62767 (217)782–4515 www.idfpr.com
n Indiana StephenW.Robertson ActingCommissionerofInsurance IndianaDepartmentofInsurance 311W.WashingtonStreet,Suite300 Indianapolis,IN46204–2787 (317)232–2385 www.in.gov/idoi
n Iowa SusanE.Voss InsuranceCommissioner IowaInsuranceDivision 330MapleStreet DesMoines,IA50319–0065 (515)281–5705 www.iid.state.ia.us
nKansas SandyPraeger InsuranceCommissioner KansasInsuranceDepartment 420SW9thStreet Topeka,KS66612–1678 (785)296–3071 www.ksinsurance.org
nKentucky SharonP.Clark InsuranceCommissioner KentuckyDepartmentofInsurance 215W.MainStreet Frankfort,KY40601 (502)564–3630 http://insurance.ky.gov
nLouisiana JamesJ.Donelon CommissionerofInsurance LouisianaDepartmentofInsurance 1702N.3rdStreet BatonRouge,LA70802 (225)342–5900 www.ldi.state.la.us
nMaine MilaKofman SuperintendentofInsurance MaineBureauofInsurance 34StateHouseStation Augusta,ME04333-0034 (207)624–8475 www.maine.gov/pfr/insurance
173State Insurance Officials
n Maryland ElizabethSammis ActingInsuranceCommissioner MarylandInsuranceAdministration 200St.PaulPlace,Suite2700 Baltimore,MD21202 (410)468–2000 www.mdinsurance.state.md.us
nMassachusetts JosephG.Murphy CommissionerofInsurance MassachusettsDivisionofInsurance 1000WashingtonStreet,Suite810 Boston,MA02118-6200 (617)521–7794 www.state.ma.us/doi
nMichigan KenRoss Commissioner MichiganOfficeofFinancialandInsurance Regulation OttawaBuilding,3rdFloor 611W.OttawaStreet Lansing,MI48933–1070 (517)373–0220 www.michigan.gov/ofir
nMinnesota GlennWilson Commissioner MinnesotaDepartmentofCommerce 857thPlaceEast,Suite500 St.Paul,MN55101-2198 (651)296–2488 www.insurance.mn.gov
nMississippi MikeChaney CommissionerofInsuranceandStateFireMarshal MississippiInsuranceDepartment 1001WoolfolkStateOfficeBuilding 501N.WestStreet Jackson,MS39201 (601)359–3569 www.mid.state.ms.us
nMissouri JohnM.Huff Director MissouriDepartmentofInsurance,Financial Institutions&ProfessionalRegistration 301WestHighStreet,Room530 JeffersonCity,MO65101 (573)751–4126 www.insurance.mo.gov
n Montana MonicaJ.Lindeen CommissionerofSecuritiesandInsurance MontanaStateAuditor’sOffice 840HelenaAvenue Helena,MT59601 (406)444–2040 www.sao.state.mt.gov
nNebraska AnnM.Frohman DirectorofInsurance NebraskaDepartmentofInsurance TerminalBuilding 941OStreet,Suite400 Lincoln,NE68508-3639 (402)471–2201 www.doi.ne.gov
nNevada BrettBarratt CommissionerofInsurance NevadaDivisionofInsurance 788FairviewDrive,Suite300 CarsonCity,NV89701 (775)687–4270 www.doi.state.nv.us
nNew Hampshire RogerA.Sevigny InsuranceCommissioner NewHampshireInsuranceDepartment 21SouthFruitStreet,Suite14 Concord,NH03301 (603)271–2261 www.nh.gov/insurance
nNew Jersey ThomasB.Considine CommissionerofInsurance NewJerseyDepartmentofBankingand Insurance,InsuranceDivision 20WestStateStreet P.O.Box325 Trenton,NJ08625 (609)292–7272 www.state.nj.us/dobi
nNew Mexico JohnFranchini SuperintendentofInsurance NewMexicoPublicRegulationCommission, InsuranceDivision P.E.R.A.Building,4thFloor 1120PaseodePeralta SantaFe,NM87501 (505)827–4601 www.nmprc.state.nm.us/id.htm
174 American Council of Life Insurers
n New York JamesJ.Wrynn SuperintendentofInsurance NewYorkStateInsuranceDepartment 25BeaverStreet NewYork,NY10004 (212)480–2301 www.ins.state.ny.us
nNorth Carolina WayneGoodman CommissionerofInsurance NorthCarolinaDepartmentofInsurance 1201MailServiceCenter Raleigh,NC27699–1201 (919)733-2032 www.ncdoi.com
nNorth Dakota AdamW.Hamm InsuranceCommissioner NorthDakotaInsuranceDepartment StateCapitol,FifthFloor 600EastBoulevardAvenue Bismarck,ND58505–0320 (701)328–2440 www.nd.gov/ndins
nOhio MaryJoHudson DirectorofInsurance OhioDepartmentofInsurance 50W.TownStreet ThirdFloor,Suite300 Columbus,OH43215 (614)644–2658 www.ohioinsurance.gov
nOklahoma KimHolland InsuranceCommissioner OklahomaInsuranceDepartment 5CorporatePlaza 3625N.W.56thStreet,Suite100 OklahomaCity,OK73112 (405)521–2828 www.ok.gov/oid
nOregon TeresaMiller InsuranceAdministrator OregonInsuranceDivision 350WinterStreet,NE,Room440 Salem,OR97301-3883 (503)947–7980 www.insurance.oregon.gov
n Pennsylvania RobertPratter ActingInsuranceCommissioner PennsylvaniaInsuranceDepartment 1326StrawberrySquare Harrisburg,PA17120 (717)787-7000 www.ins.state.pa.us
nRhode Island A.MichaelMarques DirectorofInsurance RhodeIslandDepartmentofBusinessRegulation 1511PontiacAvenue,Bldg.69-2 Cranston,RI02920 (401)462–9500 www.dbr.state.ri.us/division/insurance
nSouth Carolina ScottRichardson DirectorofInsurance SouthCarolinaDepartmentofInsurance CapitolCenter,10thFloor 1201MainStreet,Suite1000 Columbia,SC29201 (803)737–6160 www.doi.sc.gov
nSouth Dakota MerleD.Scheiber DirectorofInsurance SouthDakotaDivisionofInsurance 445EastCapitolAvenue Pierre,SD57501 (605)773–3563 www.state.sd.us/drr2/reg/insurance
nTennessee LeslieA.Newman Commissioner TennesseeDepartmentofCommerceand Insurance 500JamesRobertsonParkway DavyCrockettTower Nashville,TN37243-0565 (615)741–2241 www.state.tn.us/commerce
nTexas MikeGeeslin CommissionerofInsurance TexasDepartmentofInsurance 333Guadalupe Austin,TX78701 (512)463–6169 www.tdi.state.tx.us
175State Insurance Officials
n Utah NealGooch CommissionerofInsurance UtahInsuranceDepartment StateOfficeBuilding,Room3110 SaltLakeCity,UT84114–6901 (801)538–3800 www.insurance.utah.gov
nVermont MichaelBertrand Commissioner(BISHCA) StateofVermontDepartmentofBanking, Insurance,SecuritiesandHealthCare Administration 89MainStreet,Drawer20 Montpelier,VT05620–3101 (802)828–3301 www.bishca.state.vt.us
nVirginia AlfredW.Gross CommissionerofInsurance VirginiaStateCorporationCommission BureauofInsurance TylerBuilding,1300E.MainStreet Richmond,VA23219 (804)371–9741or877-310-6560 www.scc.virginia.gov/division/boi
nWashington MikeKreidler InsuranceCommissioner WashingtonStateOfficeoftheInsurance Commissioner 5000CapitolBoulevard Tumwater,WA98501 (360)725–7000 www.insurance.wa.gov
nWest Virginia JaneL.Cline InsuranceCommissioner WestVirginiaOfficesoftheInsurance Commissioner 1124SmithStreet Charleston,WV25301 (304)558–3386 www.wvinsurance.gov
nWisconsin SeanDilweg CommissionerofInsurance WisconsinOfficeoftheCommissionerof Insurance 125SouthWebsterStreet Madison,WI53703-3474 (608)266–3585 www.oci.wi.gov
n Wyoming KenVines InsuranceCommissioner WyomingInsuranceDepartment 106East6thAvenue Cheyenne,WY82002 (307)777–7401 http://insurance.state.wy.us
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AMERICAN COUNCIL OF LIFE INSURERS
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