Rising rates, weak sales hurt profits in 1994

Article Abstract:

Life and health insurers posted net income after taxes of $10.2 billion in 1994, a 22.1% decrease from 1993 income. Capital losses of about $1.9 billion contributed to the $2.9 billion decrease in net income. Premium growth was 6.4%, slowing from a 10.3% growth rate in 1993. Driving premium growth was a 13.5% increase in income from individual annuities and a 5.2% increase in ordinary life premiums.

Accident & Health Insurance, Insurance Carriers, Medical Service and Health Insurance

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A familiar refrain: rates squeeze profits

Article Abstract:

Life and health insurers' profits fell sharply in 1994, thanks in large part to rising interest rates. Insurers' after-tax net income declined over 20%, to $11.7 billion, and their return on equity fell to 11%, a drop of over three percentage points. The declines reflect the interest rate sensitivity of low-margin insurance products, and the inability of insurers to sell their high-margin products.

Direct Health and Medical Insurance Carriers, Hospital and medical service plans, Medical Care Insurance, Economic aspects, Interest rates, Health insurance, Health insurance industry

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Heady growth ground to a halt in 1994

Article Abstract:

Separate account growth rates in 1994 declined as uncertainties in the market scared investors away from the variable annuities as a method to improve their portfolios. Insurers like separate accounts for their ability to shift investment risk responsibility to the policyholder. In 1993 separate account assets made up 17.4%, or $312.5 billion of the life and health industry assets.

Annuity Insurance, Statistics, Annuities, Variable annuities

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