Annuities Soar as Source of Life Insurer Revenue

U.S. life insurers are getting a lot more of their retail product premium revenue from annuities than from life insurance these days.

Individual annuities accounted for $344 billion of life insurers’ $1.5 trillion in direct written premiums in 2023, or about 24% of the total, according to new industrywide totals from A.M. Best.

Only $168 billion of the premiums, or 11% of the total, came from individual life insurance.

Direct written premiums increased 16% between 2022 and 2023 for individual annuities and fell 5.3% for individual life.

What it means: As the 69 million baby boomers rush toward retirement, the focus at life insurers is much more on income planning. One question is whether increased boomer interest in estate planning and a possible expansion of the estate tax in 2026 will push the revenue pendulum back toward life insurance.

The data: A.M. Best is one of a small number of what the U.S. Securities and Exchange Commission classifies as nationally recognized statistical rating organizations.

The firm gets its insurance company performance data from the official reports the insurers file with state insurance regulators, based on the regulators’ statutory accounting principles, rather than the U.S. generally accepted accounting principles that public companies use.