Weiss Ratings


Life and Health Insurers' Profits Climb 311% in 2003
$6.9 billion gain in individual annuity business

JUPITER, Fla., July 6, 2004 — The nation's life and health insurers enjoyed a 310.8 percent increase in net income during 2003, earning $30 billion compared to $7.3 billion in 2002, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

The rebound in the equity market was primarily responsible for the industry's surge in profitability as insurers saw improvement on the sale of invested assets, suffering only a $4.6 billion capital loss compared to the $15.5 billion capital loss reported in 2002. As industry profits climbed, so too did capital and surplus, which had its largest increase since 1997, rising 12.9 percent, from $242.7 billion at year-end 2002 to $274 billion at December 31, 2003. Insurers reporting the largest increases in capital and surplus were:

Company Headquarters Weiss
Safety
Rating
Capital & Surplus ($Mil)
4th Q
2003
4th Q
2002
$
Change
Prudential Ins. Co. of America Newark, N.J. B- 7,471.6 5,699.4 1,772.2
Hartford Life & Accident Ins. Co. Simsbury, Conn. B+ 4,470.5 3,018.9 1,451.6
American General Life Ins. Co. Houston, Texas B+ 4,067.3 2,863.2 1,204.1
New York Life Ins. Co. New York, N.Y. A 9,136.8 7,985.5 1,151.4
Metropolitan Life Ins. Co. New York, N.Y. A- 7,977.9 6,986.0 991.9

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak; F=Failed; U=Unrated

"The equity markets were much kinder to the industry in 2003, and we expect to see positive gains as 2004 progresses," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "Insurers didn't need to dip into capital as much to absorb the higher losses and maintain reserves."

Individual Annuities Earn $6.9 Billion; Group Health and Annuity Profits Surge

In analyzing line of business results of life and health insurers, Weiss found that individual annuities, the industry's second largest product line after individual life, increased its profits by $7.6 billion from last year, earning $6.9 billion in 2003 compared to a $689.2 million loss in 2002.

Life and health insurers reporting the largest increases in individual annuity income include:

Company Headquarters Weiss
Safety
Rating
Gain (Loss) on
Individual Annuities ($Mil)
12/31/03 12/31/02 $
Change
Metlife Investors USA Ins. Co. Los Angeles, Calif. B 21.1 (1,085.4) 1,106.4
Axa Corporate Solutions Life Reins New York, N.Y. C 179.9 (201.2) 381.1
AIG Annuity Insurance Company Amarillo, Texas B 449.2 76.4 372.9
Travelers Life & Annuity Company Hartford, Conn. B- 183.1 (186.8) 369.9
Teachers Ins. & Annuity Assoc. New York, N.Y. A+ 1,127.9 791.6 336.3

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak; F=Failed; U=Unrated

At the same time, group health and group annuity products continued posting impressive profits. Group health profits surged 108 percent, from $2.1 billion in 2002 to $4.3 billion in 2003, while group annuity income jumped 29 percent, from $4.5 billion to $5.8 billion during the same period.

"Individual annuities were hit particularly hard last year, but the improving equity markets and new marketing strategies have stopped the bleeding. Companies cut back on aggressive guaranteed minimum benefits and improved their spreads by lowering guaranteed crediting rates and killing products with high crediting rates," added Gannon.

Insurers' Total Assets Increase 12.3%

With the economic rebound sparking an increase in profits, life and health insurers' total assets rose $420.8 billion to $3.8 trillion at December 31, 2003, compared to $3.4 trillion at year-end 2002. This represents a 12.3 percent increase in total assets, the largest percentage increase since 1997.

Life and health insurers reporting the largest increases in total assets include:

Company Headquarters Weiss
Safety
Rating
Total Assets at
12/31/03
($Mil)
Total Assets at
12/31/02
($Mil)
$
Change
Metropolitan Life Ins. Co. New York, N.Y. A- 229,125.9 200,525.2 28,600.7
Equitable Life Asr. Soc. of the US New York, N.Y. B- 95,868.7 78,251.3 17,617.4
Sun Life Asr. Co. of Canada (US) Wellesley Hills, Maine B- 37,126.3 19,725.7 17,400.6
Hartford Life & Annuity Ins. Co. Simsbury, Conn. B+ 59,185.1 42,357.6 16,827.5
Allstate Life Ins. Co. Northbrook, Ill. A- 62,740.8 49,828.4 12,912.4

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak; F=Failed; U=Unrated

Notable Upgrades and Downgrades

Among the 1,087 insurers recently reviewed by Weiss, 125 companies were upgraded and 29 were downgraded. Notable upgrades include:

•Metropolitan Life Ins. Co. (New York, N.Y.) from B+ to A-
•Reliastar Life Insurance Co. (Minneapolis, Minn.) from C+ to B-
•Union Central Life Insurance Co. (Cincinnati, Ohio) from C+ to B-

Notable downgrades include:

•Financial American Life Insurance Co. (Des Plaines, Ill.) from C to D+
•PacifiCare Life Assurance Co. (Santa Ana, Calif.) from C- to D+
•Revios Reinsurance U.S. Inc. (Nashville, Tenn.) from C- to D+

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies and risk diversification.

Weiss Ratings, Inc., reviews more than 8,000 stocks daily, including all those traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq. Weiss also issues investment ratings on more than 12,000 mutual funds, covering equity, fixed-income, and closed-end funds, and provides financial safety ratings on more than 15,000 financial institutions, including banks and insurance companies. It is the only major rating agency that receives no direct or indirect compensation from the companies it rates for issuing its ratings. Revenues are derived strictly from sales of its products to consumers, institutions, businesses, libraries, and governmental agencies. Ratings and analyses, consumer financial and investment guides, and other products are available for purchase through www.weissratings.com or by calling 800-289-9222.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $14.99 through www.WeissRatings.com, or starting at $19 by calling 800-289-9222.

 

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Note to editors: National and state listings of strongest and weakest life, health, and annuity insurers are available.

 

 


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