NEW YORK: The U.S. life insurance and annuity industry’s net income fell by 66 percent in the first half of 2020, compared with the same prior-year period, driven predominantly by a 10% decline in premiums and annuity considerations.

This financial review is detailed in a new Best’s Special Report, titled, “First Look— Six-Month 2020 Life/Annuity Financial Results,” and the data is derived from companies’ six-month 2020 interim statutory statements that were received as of Aug. 26, 2020, representing an estimated 98% of total industry premiums and annuity considerations.

According to the report, although some life insurers provided COVID-19-related premium refunds to policyholders, the primary reason for the steep premium decline was Jackson National’s ceded coinsurance agreement with Athene Life Re, which had the effect of moving approximately $27 billion of premium out of the U.S. statutory industry population and into Bermuda.

Total expenses for the industry increased 1.1%, as a 5.0% decline in surrender benefits, a 13.3% decline in general and other expenses and $11.6 billion less in transfers to separate accounts offset an 11.4% increase in death benefits.

In addition, the premium decline and minimal expense increase resulted in a drop in net operating gain of 95.3% from the prior-year period, to $1.6 billion. Despite the reduction in net income and a 50% decline in unrealized gains, capital and surplus increased by 4.1% to $440.8 billion over the six-month period.

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