Resiliency of the U.S. Life Insurance Industry
- TRC Financial
- 13 minutes ago
- 6 min read
In troubled times, the public has relied on the life insurance industry to steady the course. And with good reason. Over the past 150 years, the United States has endured many financial and public health crises. Throughout all those events, life insurance companies have been resilient and continued to provide benefits to their policyholders. As seen in Appendix A, the 37 largest life insurance groups in the U.S. have exemplified that resiliency and commitment to policyholders.
Most recently, during the Covid-19 pandemic, when uncertainty reigned, the life insurance industry paid out more than $90 billion to beneficiaries in 2020, the highest ever in any single year, according to the American Council of Life Insurers. [1] Consumers reaffirmed their trust in life insurers during the first half of 2021, contributing to the life insurance industry’s biggest sales gain since 1983. [2]
The growth in life insurance sales after a pandemic has occurred once before. Following the Spanish flu pandemic of 1918 which killed 675,000 in the U.S., the industry experienced double-digit growth for three to five years. [3]
A timeline of major financial shocks illustrates the resilience of the life insurance industry.
Not to be overlooked, the 19th Century and the start of the 20th Century experienced three major financial panics prior to the Great Depression which inured the life insurance industry to volatile times.
THREE MAJOR FINANCIAL PANICS IMPACTING U.S. AND GLOBAL ECONOMIES IN THE 19TH AND EARLY 20TH CENTURIES
Panic of 1873
A global economic depression that lasted until 1877 triggered by bankruptcies in the relatively new railroad industry which led to a large number of bank failures.
14 life insurers began operations before the start of this financial crisis.
Panic of 1893
An economic depression which technically lasted eight months, but whose effects lasted for several years. The event involved bank runs, a credit crunch, and a lack of confidence in paper currency.
22 life insurers began operations before the start of this financial crisis.
Panic of 1907
A failed attempt by investors to corner the market on United Copper Co. caused banks which had lent money to the investors to suffer runs by worried depositors. The runs later spread to other banks and trusts that declared bankruptcy.
28 life insurers began operations before the start of this financial crisis.
A PATH OF RESILIENCE
Fourteen of the 37 largest life insurance groups operating today trace their origins back to before the Panic of 1873, a period spanning over 150 years. The resilience of the life insurance industry is evident from the number of insurance companies in the "150+ Club."
The 150+ Club: 14 of the 37 companies have been doing business for over 150 years and have survived and thrived through a civil war, two global pandemics, and numerous recessions, depressions, and financial panics.
Brighthouse Life Insurance Co.
Equitable Financial Life Insurance Co.
Genworth Financial
Global Atlantic Financial
Guardian Life Insurance Co. of America
John Hancock Life Insurance Co. (U.S.A.) [4]
Massachusetts Mutual Life Insurance Co.
Metropolitan Life Insurance Co.
National Life Group
New York Life Insurance Co.
Northwestern Mutual Life Insurance Co.
Pacific Life Insurance Co.
Penn Mutual Life Insurance Co.
Unum
That resilience spans three centuries, continuing through today.
According to AM Best [5], 184 life and health insurers became impaired [6] between 2001 and 2023 with affiliated operating entities within the same holding company being counted separately. [7] A total of 70% of the impairments occurred in what are accident and health companies. The other 30% were active in the life insurance business. The vast majority of these companies were unrated, had surplus levels below $20 million, and were poorly diversified from a business line and geographical standpoints.
This contrasts to the U.S. banking industry which the Federal Deposit Insurance Corporation (FDIC) reported had 566 bank failures with a combined $1.27 trillion in total assets.
Both industries hold a large percentage of the invested assets in the U.S. economy. The Federal Reserve states that U.S. commercial banks held over $23 trillion in assets at the end of 2023. The National Association of Life Insurance Commissioners (NAIC) reported that the U.S. life insurance industry held nearly $5.5 trillion of assets as of year-end 2023.
A THUMBNAIL OF LIFE INSURANCE AND BANK FAILURES (2001 TO 2023)
Why the Difference?
The primary reason that banks are more susceptible to failure than life insurers is the nature of their liabilities compared to those of the life insurance industry. Banks typically have a high percentage of demand deposits, which means that depositors have immediate access to the funds in their accounts if they choose to partially or fully liquidate their accounts.
On the other hand, most of the liabilities of life insurers are either contingent upon an event (death, disability, or other loss) or are structured payments (such as an annuity).
In periods of extreme financial stress, bank assets are usually the first assets to be accessed when liquidity needs arise and values in life or annuity policies are secondary.
Life insurers also have a robust state-level regulatory regime and favorable liability structure that is relatively insulated from demand for liquidity during financial crises.
Despite the consistent strong showing of the life insurance industry, it’s worth noting that all financial institutions have some risk, however small, of failing when liabilities exceed assets.
APPENDIX A
There are 37 life insurance groups [8] that rank in the top 50 in both general account assets [9] and in-force permanent life insurance coverage in the U.S.
AEGON USA Group*
Allianz Life Insurance Co. of North America
American National Insurance Co.
Brighthouse Life Insurance Co.
Corebridge Financial*
Equitable Financial Life Insurance Co.
Fidelity & Guaranty Life Insurance Co.
Genworth Financial*
Global Atlantic Financial*
Great-West Lifeco*
Guardian Life Insurance Co. of America
Jackson National Life Insurance Co.
John Hancock Life Insurance Co. (U.S.A.)
Knights of Columbus
Lincoln National Life Insurance Co.
Massachusetts Mutual Life Insurance Co.
Metropolitan Life Insurance Co.
Mutual of Omaha Life & Health Companies*
National Life Group*
Nationwide Financial*
New York Life Insurance Co.
Northwestern Mutual Life Insurance Co.
OneAmerica Group*
Pacific Life Insurance Co.
Penn Mutual Life Insurance Co.
Principal Life Insurance Co.
Protective Life Insurance Co.
Prudential Financial*
Resolution Life US Group*
Sammons Financial*
Securian Financial*
State Farm Life Insurance Co.
Symetra Life Insurance Co.
Thrivent Financial for Lutherans
Unum*
Voya Financial*
Western & Southern Financial*
* Consolidated companies; see Appendix B for primary insurance companies
This group represents over 80% of the in-force permanent life insurance coverage for the U.S. life/health industry.
APPENDIX B
* Excludes assets held in separate accounts
** Total life insurance coverage of permanent policies, including policies with separate accounts; excludes term life insurance
[1] 2021 ACLI Life Insurers Fact Book, Dec. 9, 2021.
[2] AM Best Nov. 10, 2021 press release, based on LIMRA data.
[3] Life Insurance Sales Are Up, But for How Long?, Terence Dopp, Best’s Review®, November 2021. The article references an AM Best TV interview with David Levenson, president and CEO of LIMRA, and LOMA.
[4] Based on the date of inception of the former John Hancock Life Insurance Co., which commenced doing business in 1862 and was merged into John Hancock Life Insurance Co. (U.S.A.) in 2009.
[5] 2023 US Life/Health Impairments Update, AM Best; January 31, 2025
[6] An impaired insurer is defined by AM Best as one that has been placed into “conservation, rehabilitation, and/or insolvent liquidation”. This is compared to a failed bank, which is defined by the FDIC as being closed by a banking regulatory agency when it is unable to meet its obligations to depositors and others.
[7] For example, six member companies of the Friday Health group of health insurance companies were counted as six impairments in 2023 even though they are all part of the same company group.
[8] Data reflects total for all affiliated life insurance companies within the same corporate group.
[9] This excludes assets held in separate accounts that support policies like variable life and annuities.
[10] Originally formed as The Travelers Insurance Co.
[11] Originally incorporated as The Life Insurance Co. of Virginia
[12] Originally incorporated as State Mutual Life Assurance Co. of America. Global Atlantic is mainly comprised of three life insurance companies including Commonwealth Annuity and Life Insurance Co. and Accordia Life and Annuity Co.
[13] Originally incorporated as Germania Life Insurance Co. of Virginia
[14] Originally incorporated as Coleman Life Insurance Co.; National Life Insurance Co. is smaller in scale but has been in business since 1850
[15] Subsidiary Nationwide Life and Annuity Insurance Co. has more in-force permanent life insurance coverage
[16] Originally incorporated as The Pacific Mutual Life Insurance Company of California
[17] Affiliated insurer Midland National Life Insurance Co. has more in-force permanent life insurance coverage
[18] Company is a continuation of Union Mutual Life Insurance
This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact us. Information obtained from third-party sources is believed to be reliable but not guaranteed.
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