Top Performing Life Insurers

The rankings are based on 2008 financial results. The sources for all the rankings (except for Ratings) are based on information from the A.M. Best Company. Ratings are from the ratings agencies themselves and are as of June 2009. In Ratings, both Northwestern Mutual and New York Life have the same rank, however, New York Life has a negative outlook.

In terms of performance, four factors can be considered:
· Gain Before Dividends & Taxes – this is the difference between the company’s revenue and its expenses. This measure is positively impacted by increases in premium and investment income, savings from mortality experience and careful management of expenses.
· Life Dividends Paid – These life insurance dividends represent value over and above any contractual guarantees.
· Lapse Rate – a low Lapse Rate means a company has a high retention rate, referred to as persistency. Some firms view this as an indicator of policy owner satisfaction with the performance of their policies. The chart reflects the lapse rate on the amount of life insurance in force.
· Unit Costs – ratio of life insurance expenses incurred to total life insurance premiums paid. The better ratings reflect the Life Insurer’s overall expense management while attracting a growing number of new and repeat customers resulting in lower unit costs.

In terms of Size & Scale, two factors can be considered:
· Total Assets – includes both those the company invests on behalf of its policy owners and those policy owners direct within their life insurance policy or annuity, and is an important reflection of an insurer’s size and scale of operations.
· Total Life Premium – is used by insurers as a primary way to measure market share. Total premium includes all the individual life insurance premiums paid by policy owners, as well as the premiums received when policy owners use policy dividends to purchase additional insurance coverage.

In terms of Strength & Security, three factors can be considered:
· Surplus Ratio – amount over and above reserves that is set aside to cover benefits and losses. It is an indicator of additional safety margin.
· Total Capital & Surplus – identifies the difference between assets and liabilities and is one measure of the financial foundation of an Life Insurer.
· Ratings – insurance financial strength ratings by ratings agencies provide a third-party (independent) perspective on current financial strength. Ratings are from A.M. Best, Fitch, Moody’s, and Standard & Poor’s.