< PreviousCHAPTER 2: PROPERTY/CASUALTY 18 work-from-home operations or support hybrid work environments. Innovation in all RSHUDWLRQDOSKDVHVDQGLQULVNPDQDJHPHQWZLOODOVRFRQWLQXHWREHQH¿WSHUVRQDODXWRZULWHUV as they maintain their focus on pricing adequacy and auto repair management in order to remain competitive. 7KHPDLQFRXQWHUEDODQFLQJIDFWRUVLQFOXGHWKHQHDUDQGPHGLXPWHUPHFRQRPLFIDOORXW and market disruption arising from the pandemic, regulatory uncertainty, as well as the prevailing low interest rate environment, which will continue to pressure overall investment returns in 2021. However, given the compulsory nature of personal auto insurance, the H൵HFWVRIWKHSDQGHPLFRQWKHVHJPHQWDSSHDUWREHPRUHPXWHGWKDQRQVRPHRIWKH commercial lines. Property/Casualty Coverage Types and Lines of Business Property insurance covers damages or loss of property. As a result, rates can be VLJQL¿FDQWO\KLJKHULQDUHDVVXVFHSWLEOHWRSHULOVVXFKDVKXUULFDQHV&DVXDOW\LQVXUDQFH covers indemnity losses and legal expenses from losses such as bodily injury or damage that the policyholder may cause to others. When a loss occurs, insurance companies establish a claim reserve for the amount of the expected cost of the claim using a projection of estimated loss costs over a period of time. While property reserves are established when a property loss occurs and are usually settled soon after a loss, casualty reserves are established for losses that may not be paid or settled for years (i.e. medical professional liability, workers’ compensation, SURGXFWLRQOLDELOLW\DQGHQYLURQPHQWDOUHODWHGFODLPV7KHVH³ORQJWDLO´OLQHVRI business are so named because of the length of time that may elapse before claims are ¿QDOO\VHWWOHG 'HWHUPLQLQJDQGFRPSDULQJSUR¿WDELOLW\DPRQJSURSHUW\FDVXDOW\FRPSDQLHVW\SLFDOO\ is achieved through the combined ratio, which measures the percentage of claims and expenses incurred relative to premiums earned/written. A combined ratio of less than PHDQVWKDWWKHLQVXUHULVPDNLQJDQXQGHUZULWLQJSUR¿W&RPSDQLHVZLWKFRPELQHG UDWLRVRYHUVWLOOPD\HDUQDQRSHUDWLQJSUR¿WKRZHYHUEHFDXVHWKHUDWLRGRHVQRW account for investment income. Property/casualty insurance generally falls into two areas of concentration: personal and commercial lines. 7KHWZRODUJHVWSURGXFWOLQHVZLWKLQWKHSHUVRQDOOLQHVVHFWRUDUHDXWRLQVXUDQFHDQG homeowners insurance. Commercial lines include insurance for businesses, professionals and commercial CHAPTER 2: PROPERTY/CASUALTY www.ambest.com19 HVWDEOLVKPHQWV7KHUHDUHPDQ\PRUH varieties of commercial lines products than SHUVRQDOOLQHV7KHODUJHVWWZROLQHVDUH workers’ compensation and other liability. Personal Lines of Business Personal insurance protects families, individuals and their property, typically homes and vehicles, from loss and damage. Auto and homeowners coverage dominates mostly because of legal provisions that mandate coverage be obtained. Auto: 7KHODUJHVWOLQHRIEXVLQHVVLQWKH property/casualty sector is auto insurance. According to AM Best’s BestLink database, the top 50 groups writing auto LQVXUDQFHFDSWXUHGRIWKHWRWDO PDUNHWLQRUELOOLRQRIWKH ELOOLRQIRUDOO86DXWRFRYHUDJH7KH largest writer of U.S. private passenger auto, and all auto coverage overall, remains State Farm Group. Auto insurance includes collision, liability, comprehensive, personal injury protection and coverage in the event another motorist is uninsured or underinsured. Homeowners: 7KHVHFRQGODUJHVWOLQH of personal property/casualty insurance is homeowners, representing $110 billion in direct premiums written for the U.S. property/casualty industry in 2020. Historically, the leading cause of U.S. insured catastrophe losses has been hurricanes and tropical storms, followed by severe thunderstorms and winter storms. 7KHWRSJURXSVZULWLQJKRPHRZQHUV PXOWLSHULOFRYHUDJHUHSUHVHQWHG of the U.S. market for homeowners FRYHUDJHDFFRUGLQJWR$0%HVW¶V%HVW/LQNGDWDEDVH7KHODUJHVWZULWHURIKRPHRZQHUV multiperil coverage is also State Farm Group. U.S. Property/Casualty – Direct Premiums Written by Line (2020) (US$ 000) Business Line Direct Premiums Written Private Passenger Auto Liability$148,169,885 No-Fault16,408,253 Other Liability131,761,632 Homeowners Multiple Peril110,520,134 Private Passenger Auto Physical Damage101,966,129 Other Liability88,196,138 Occurrence55,149,217 Claims -Made31,758,898 Excess Workers' Compensation1,288,022 Workers' Compensation51,162,012 Commercial Multiple Peril 46,515,114 Non-Liability30,391,239 Liability16,123,876 Commercial Auto Liability34,997,640 No-Fault835,123 Other Liability34,162,517 Inland Marine25,936,458 Fire16,788,327 Allied16,587,447 Mult Peril Crop10,825,797 Comm Auto Phys Damage10,981,139 Medical Professional Liability10,144,216 Surety6,932,850 Mortgage Guaranty5,746,837 Farmowners Multiple Peril 4,738,558 Group Accident & Health4,729,574 Earthquake4,278,144 Product Liability4,243,280 Ocean Marine4,171,312 Warranty3,401,030 Federal Flood3,045,673 Other Accident & Health2,333,905 Credit2,326,005 Aircraft2,210,034 Boiler and Machinery2,158,196 Fidelity1,324,962 Private Crop1,115,706 Private Flood735,094 Financial Guaranty476,488 Burglary and Theft454,677 International46,088 Aggregate Write-ins1,403,105 Total P/C Industry728,661,954 Note: Data for some companies in this report has been received from the NAIC. Reflects Grand Total (includes Canada and U.S. Territories) Source: — State/Line (P/C Lines) - P/C, US; Data as of: June 11, 2021CHAPTER 2: PROPERTY/CASUALTY 20 Commercial Lines of Business Commercial insurance protects businesses, hospitals, governments, schools and other organizations from losses. 7ZRRIWKHODUJHVWOLQHVLQWKHFRPPHUFLDOVHJPHQWDUHZRUNHUV¶FRPSHQVDWLRQDQG general liability. Workers’ Compensation: ,QVXUHUVRQEHKDOIRIHPSOR\HUVSD\EHQH¿WVUHJDUGOHVV of who is to blame for a work-related injury or accident, unless the employee was negligent. In return, the employee gives up the right to sue. General Liability: General liability insurance protects business owners (the ³LQVXUHG´IURPWKHULVNVRIOLDELOLWLHVLPSRVHGE\ODZVXLWVDQGVLPLODUFODLPV /LDELOLW\LQVXUDQFHLVGHVLJQHGWRR൵HULWVLQVXUHGVVSHFL¿FSURWHFWLRQDJDLQVWWKLUG party insurance claims; in other words, payment is not typically made to the insured, EXWUDWKHUWRVRPHRQHVX൵HULQJORVVZKRLVQRWDSDUW\WRWKHLQVXUDQFHFRQWUDFW,Q general, damages caused by intentional acts are not covered under general liability insurance policies. When a claim is made, the insurance carrier has the duty to defend the insured. Other major lines of business in the property/casualty commercial sector include: Aircraft (all perils): Aircraft coverage is often excluded under standard commercial general liability forms. Coverage for aircraft liability loss exposure can include hull (physical damage) and medical payments coverages. Allied Lines: Coverage for loss of or damage to real or personal property by reason RWKHUWKDQ¿UH/RVVHVIURPZLQGDQGKDLOZDWHUVSULQNOHUÀRRGUDLQFLYLOGLVRUGHU and damage by aircraft or vehicles are included. Boiler and Machinery: Coverage for damage to boilers, pressure vessels and machinery. Burglary and Theft: Coverage to protect property from burglary, theft, forgery, FRXQWHUIHLWLQJIUDXGDQGWKHOLNH3URWHFWLRQFDQLQFOXGHRQDQGR൵SUHPLVHV exposure. Commercial Auto: &RYHUDJHWKDWSURWHFWVDJDLQVW¿QDQFLDOORVVEHFDXVHRIOHJDO liability for injury to persons or damage to property of others caused by the insured’s commercial motor vehicle. Commercial Multiple Peril: Commercial insurance coverage combining two or more property, liability and/or risk exposures. CHAPTER 2: PROPERTY/CASUALTY www.ambest.com21 Fidelity: Coverage for employee theft of money, securities or property, written with a per loss limit, a per employee limit or a per position limit. Employee dishonesty coverage is one of the key coverages provided in a commercial crime policy. Financial Guaranty: Credit protection for investors in municipal bonds, commercial PRUWJDJHEDFNHGVHFXULWLHVDQGDXWRRUVWXGHQWORDQV3URYLGHV¿QDQFLDOUHFRXUVHLQ the event of a default on the bond or other instrument. Fire: &RYHUDJHIRUORVVRIRUGDPDJHWRUHDORUSHUVRQDOSURSHUW\GXHWR¿UHRU lightning. Losses from interruption of business and loss of other income from these sources are included. Inland Marine: Coverage for goods in transit and goods, such as construction equipment, subject to frequent relocation. Medical Professional Liability: Protects against failure to use due care and the standard of care expected from a doctor, dentist, nurse, hospital or other health-related organization. Mortgage Guaranty: ,QVXUDQFHDJDLQVW¿QDQFLDOORVVEHFDXVHRIQRQSD\PHQWRI principal, interest and other amounts agreed to be paid under the terms of a note, bond or other evidence of indebtedness that is secured by real estate. Multiple Peril Crop: Protects against losses caused by crop yields that are too low. 7KLVOLQHZDVGHYHORSHGLQLWLDOO\E\WKH86'HSDUWPHQWRI$JULFXOWXUH Ocean Marine: Provides protection for all types of oceangoing vessels and their cargo as well as legal liability of owners and shippers. Products Liability: Protection against loss arising out of legal liability because of injury or damage resulting from the use of a product or the liability of a contractor after a job is completed. Surety: 7KHVXUHW\ERQGJXDUDQWHHVWKDWWKHSULQFLSDORIDERQGZLOODFWLQ accordance with the terms established by the bond.SPOTLIGHT 22 Strength Through Specialization Creating new markets and products to meet the challenge of emerging risks is at the heart of the excess and surplus lines market. 7KHPRVWGL൶FXOWULVNVLQWKHLQVXUDQFH industry often end up in the excess and surplus lines space. Key to success in the E&S space are expertise and having the knowledge to write risks that the standard market shuns, said three leaders who’ve built their careers in the E&S market. 7KRVHOHDGHUV²6WHYH'H&DUORH[HFXWLYH chairman, AmWINS Group; Pat Ryan, founder, chairman and chief executive R൶FHU5\DQ6SHFLDOW\*URXSDQG0DWW Power, president, One80 Intermediaries— discussed successes and challenges in the E&S market. Maintaining Focus ³6SHFLDOL]DWLRQLVSDUDPRXQWZKHQ\RXWDON DERXW( 6´'H&DUORVDLG³<RXFDQ¶WJR RXWWRDUHWDLOFOLHQWDQGIDNHLW<RXKDYH to be great at what you do. Retailers demand that we’re great at what we do, and so do the markets, frankly. We were highly focused on making sure that how we came to market was at a level that SURYHGRXUH[SHUWLVH´ Charlotte, N.C.-based AmWINS Group Inc., the largest independent wholesale distributor of specialty insurance products in the United States, operates WKURXJKPRUHWKDQR൶FHVJOREDOO\ and places $20 billion in annual premium. 'H&DUORVHUYHGDVFKLHIH[HFXWLYHR൶FHU of AmWINS for 17 years, leading the business through the merger of several specialty wholesalers, and has served on the AmWINS board of directors since he joined the company in December 2000. ³,WKLQNIXQGDPHQWDOO\ZKHQZHVHW out to build a foundation to the business and overall, when we thought about our strategy, what we’d set out to do was think about how to build a business that our retail clients and our market partners could look to, and how we could look to the next \HDUV´'H&DUORVDLG³:LWKRXWWKDW VWUXFWXUHZHZRXOGQ¶WEHVXFFHVVIXO´ One key to maintaining that focus was employee ownership, he said. More than RI$P:,16LVRZQHGE\DERXW employee shareholders. ³(PSOR\HHRZQHUVKLSZDVDFULWLFDOWKLQJ that we focused on, and getting that aligned so that all our employees could feel that ownership meant a lot to us. We had to make sure that we’d focused on training Steve DeCarloSPOTLIGHT www.ambest.com23 and making sure that we were experts at ZKDWZHGLG´'H&DUORVDLG DeCarlo said the company also focused on GLYHUVL¿FDWLRQ³:HGLGQ¶WZDQWWREHVLORHG as just great at Southeast wind, or just great DWHDUWKTXDNHRUMXVWJUHDWDWFDVXDOW\´ Patrick Ryan, the founder and former chairman of Aon, launched Ryan Specialty *URXSLQ³,W¶VDYHU\FRPSHWLWLYH EXVLQHVV´5\DQVDLG³,W¶VDUHDOYDOXHDGG business; it’s one that brings advice and advocacy to the retailer on behalf of their clients. When we’re the MGA, a market needs to become a go-to market. We only do underwriting, hopefully, where we can GL൵HUHQWLDWHRXUVHOYHV´ 7KHVWUDWHJ\LQEXLOGLQJ( 6EXVLQHVV is specialization, Ryan said. He looks for the top intellectual capital in specialty lines, and focuses on attracting, retaining, empowering and supporting them. ³7KHQZHVSOLWLWLQWRYHUWLFDOV´5\DQ said. Practice groups are formed based on LQGXVWU\DQGSURGXFW7KLVFDQLQFOXGHERWK distribution wholesale brokers or managing general underwriters, he said. Ryan Specialty, like many others, has both. ³:H¿QGWKDWIRFXVLQJZLWKH[SHUWVRQ an industry and a product really allows XVWRGL൵HUHQWLDWHWKHWDOHQW´5\DQVDLG ³&ULWLFDOO\ZHEHOLHYHLW¶VLPSRUWDQW to align our talent with the retail broker’s talent in that same specialty line, and then take it to a market that also has the specialty talent, so that we have alignment from the insured being represented by the retailer, to the ZKROHVDOHUDQGWRWKHFDSLWDOSURYLGHU´ He emphasized the importance of LQQRYDWLRQ³$EURNHUDOZD\VZDQWVWREH DEOHWRGL൵HUHQWLDWHWKHPVHOYHVIURPWKHLU competition, not on price but on form, on any kind of exclusive opportunity that they PLJKWKDYHZLWKWKHPDUNHW´5\DQVDLG Matt Power served as executive vice president for Lexington Insurance Co. before becoming president of One80 Intermediaries, which was formally ODXQFKHGLQ'HFHPEHU'XULQJKLV tenure in the E&S market, Power watched the industry evolve. ³,I\RXWKLQNDERXWWKH( 6EXVLQHVV RU\HDUVDJRLWZDVKLJKO\IUDJPHQWHG´ 3RZHUVDLG7KH( 6PDUNHWKDG businesses based in individual cities, and they specialized in either property or casualty. During dramatic market cycles, business was feast or famine. :KLFKZDVZK\³WKLVQRWLRQRIEXLOGLQJ GLYHUVLW\XQFRUUHODWHGFDVKÀRZVKDVEHHQ FULWLFDOO\LPSRUWDQWWRPH´3RZHUVDLG ²6WD൵ Patrick RyyanSPOTLIGHT 24 Independent Streak In a conference call to analysts, Allstate &KDLU3UHVLGHQWDQG&(27RP:LOVRQ outlined the company’s transformative growth plan that included an overhaul of how the insurer conducts business. Part of the revitalization plan, Wilson said, recognizes customers’ changing needs, largely driven by increased connectivity and advanced analytics. But while customers are becoming more comfortable with digital approaches and self-service, Wilson said they still prefer agents when purchasing a policy. Allstate is heeding that call and growing its existing independent agency force by DGGLQJUHODWLRQVKLSVZLWKGRPHVWLF agents through its acquisition of National General Holdings Corp. Like many of its personal auto insurance peers, Allstate uses independent agents as part of its distribution mix, which includes a large captive agency IRUFH/DVW\HDURIWKHFRPSDQ\¶V personal lines business was written by independent agents. For decades insurers have used agents and brokers as their primary channel of distribution. However, the rise of auto writers like Geico and Progressive, whose books of business include large direct-sales operations, has created a sizable alternative to the agent channel. A glance at today’s personal auto market, however, shows independent agents still play a key role in distribution, said Brian Sullivan, editor and publisher of the Auto Insurance Report and Property Insurance Report. A large portion of the top 10 U.S. private passenger auto writers now rely solely or partially on independent agents to market and sell products. Over the years, some insurers in the line have bolstered their stake in the channel through consolidation. In 2008, Liberty Mutual grew its independent agency base to nearly 15,000 agencies with its $6.2 billion acquisition of Safeco. Last year Nationwide, the eighth-largest SHUVRQDODXWRZULWHUEDVHGRQGLUHFW premiums written, according to BestLink, announced its decision to fully immerse itself in the channel in an attempt to meet members’ changing needs and to provide agents with longer-range growth potential. 1DWLRQZLGHZKLFKKHOGURXJKO\RI the overall independent agency market in FRPSOHWHGDWZR\HDUMRXUQH\WRHQG its exclusive agent distribution channel and transition entirely to an independent Tom WilsonSPOTLIGHT www.ambest.com25 agency force across all books of business, including personal auto. (YHQWVVXFKDVWKH&29,'SDQGHPLF highlight opportunities in the line, said -H൵5RPPHOVHQLRUYLFHSUHVLGHQWRI property/casualty sales and distribution at Nationwide. ³'LVWULEXWLRQKDVWRPDWFKFXVWRPHU expectations, and COVID is accelerating that in many ways by highlighting consumers’ desire for fast, easy digital VROXWLRQVDQGGL൵HUHQWRSWLRQVIURP multiple carriers, coupled with the advice and counsel of a trusted professional like LQGHSHQGHQWDJHQWV´KHVDLG Making the Move Recent insurance shopping numbers, KRZHYHUWHOODVOLJKWO\GL൵HUHQWWDOH When much of the nation shut down during the early stages of the COVID pandemic, auto insurers that rely on exclusive agents saw higher shopping growth rates than independent agents and direct channels, ending the 2020 second TXDUWHUDWJURZWK\HDURYHU\HDUIRU June, according to the latest LexisNexis Risk Solutions Insurance Demand Meter, which reports quarterly U.S. auto insurance shopping activity. But those numbers aren’t deterring companies like Nationwide from commiting to independent agency distribution and projecting continued sales growth from the channel. 7KLV\HDUQHDUO\H[LVWLQJDJHQWV under the Nationwide brand completed their transition to the independent agency model, joining the more than 10,000 U.S. independent agents that already have relationships with the company. Bob Rusbuldt, CEO of the Independent Insurance Agents & Brokers of America, has long predicted shifts favorable to the independent agent channel. ³)RUWKHODVW\HDUV,¶YHEHHQVD\LQJ that one day there would be just two distribution channels in the U.S.—the direct channel and the independent agency system. Now there is example after example proving that out, including Nationwide’s move to become fully independent and Allstate’s purchase of 1DWLRQDO*HQHUDO´KHVDLG AM Best senior analyst Michael Venezia pins many of those moves on evolving consumer behavior. ³,QWRGD\¶VPRELOHFHQWULFLQWHUQHWGULYHQ world customers want choice, and being R൵HUHGDTXRWHIURPMXVWRQHLQVXUHUGRHVQ¶W SURYLGHWKHPPDQ\RSWLRQV´KHVDLG ³0D\EHLW¶VQRWWKHFKHDSHVWSULFHEXW consumers now are more interested in having available options. And that’s where independent agents can really shine as VHUYLFHDGYLVHUV´9HQH]LDVDLG Allstate’s Wilson hopes the company’s expanding independent agency force DQGLWVSODQQHGELOOLRQLQYHVWPHQWWR acquire National General will not only scale up Allstate’s auto business but also make it a top 5 carrier in the independent agency distribution channel. — Lori ChordasCHAPTER 3: LIFE 26 Life Market at a Glance /LIHKHDOWKLQVXUHUVFRYHUWKHULVNVRIG\LQJR൵HUUHWLUHPHQWVDYLQJVSURGXFWVDQG SURYLGHDYDULHW\RISURWHFWLRQVDJDLQVWGLVDELOLW\VSHFL¿FW\SHVRILOOQHVVDQGPRUH $VRIWKLVSXEOLFDWLRQ$0%HVW¶VGDWDEDVHFRQWDLQHGDQQXDO¿OLQJVIRUVLQJOH life/health companies operating in the United States. Life insurers often have longer investment and coverage horizons because retirement and mortality are often events WKDWDUHGHFDGHVDZD\7KHUHODWLYHVL]HRIOLIHKHDOWKLQVXUHUVLVRIWHQJDXJHGE\ assets under management. Life insurers have increasingly embraced annuities and RWKHUIRUPVRIUHWLUHPHQWVDYLQJVDVVDOHVRIWUDGLWLRQDOOLIHSURGXFWVKDYHEHHQÀDWRU grown modestly and baby boomers transition into retirement. 7KH86OLIHKHDOWKLQGXVWU\UHFRUGHGWRWDOSUHPLXPVRIELOOLRQDQGWULOOLRQ LQWRWDOFDVKDQGLQYHVWHGDVVHWVDVRIWKHPRVWUHFHQWIXOO\HDUDYDLODEOH7KH largest lines of business as measured by premium income, in order, are individual annuities, group annuities and ordinary life. Other lines of business include supplemental contracts, credit life, group life, industrial life, group accident & health, Top 10 U.S. Life/Health Companies Ranked by 2020 direct premiums written. ) (US$ 000) RankCompany NameAMB#DPW 1UnitedHealth Life Companies06997357,229,458 2MetLife Life Ins Companies07019240,094,288 3Aetna Life Group07020237,812,399 4New York Life Group06971437,704,528 5Massachusetts Mutual Life Group06970233,145,580 6Prudential of America Group07018932,985,895 7Lincoln Finl Group07035128,260,363 8Aegon USA Group06970724,239,207 9Cigna Life Group07017321,927,354 10John Hancock Life Insurance Group06954220,755,289 Top 10 U.S. Life/Health Companies Ranked by 2020 total admitted assets.e 9, 2016) (US$ 000) RankCompany NameAMB# Total Admitted Assets 1Prudential of America Group070189680,214,029 2MetLife Life Ins Companies070192455,631,385 3New York Life Group069714371,524,092 4TIAA Group070362341,257,483 5AIG Life & Retirement Group070342327,189,170 6Lincoln Finl Group070351315,122,559 7Massachusetts Mutual Life Group069702313,208,996 8Northwestern Mutual Group069515308,865,152 9John Hancock Life Insurance Group069542302,129,970 10Jackson Natl Group069578297,086,121 Top 10 U.S. Life/Health Companies Ranked by 2020 capital & surplus.June 9, 2016) (US$ 000) RankCompany NameAMB# Capital & Surplus 1TIAA Group07036240,001,277 2Northwestern Mutual Group06951524,957,453 3Massachusetts Mutual Life Group06970224,327,413 4New York Life Group06971419,610,021 5Prudential of America Group07018917,859,206 6MetLife Life Ins Companies07019217,182,255 7State Farm Life Group07012613,751,506 8Pacific Life Group06972011,364,193 9AIG Life & Retirement Group07034210,959,749 10Thrivent Finl for Lutherans00600810,698,406 Source: AM Best data. Best’s Rankings Top 10 U.S. Life/Health Companies Ranked by 2020 net premiums written.e 9, 2016) (US$ 000) RankCompany NameAMB#NPW 1UnitedHealth Life Companies06997357,688,681 2New York Life Group06971437,467,263 3Prudential of America Group07018937,225,682 4MetLife Life Ins Companies07019233,963,055 5Aetna Life Group07020227,022,202 6Lincoln Finl Group07035123,667,947 7Aegon USA Group06970721,751,845 8Cigna Life Group07017321,148,780 9Northwestern Mutual Group06951519,148,804 10Voya Finl Group07015317,743,961CHAPTER 3: LIFE www.ambest.com27 credit accident & health and other accident & health. According to the 2021 edition of Best’s Key Rating Guide - Life/ Health, United States and Canada , Prudential of America Group leads the list of largest life/health JURXSVDQGXQD൶OLDWHG singles ranked by total admitted assets, with $680 billion in total admitted assets as of year-end 2020. Risk Profile 7KHULVNSUR¿OHRIOLIH LQVXUDQFHLVYHU\GL൵HUHQW from that of property/ casualty insurance. Life insurance is generally more asset-intensive, and most product liabilities have a substantially longer duration. 7KHPDLQSXUSRVHRIOLIHLQVXUDQFHLVWRFRYHUWKHULVNRIG\LQJWRRHDUO\RULQWKH case of annuities, the risks that may come with living longer than expected. Policies KHOSEHQH¿FLDULHVPDLQWDLQWKHLUVWDQGDUGRIOLYLQJDIWHUWKHSROLF\KROGHUGLHV7KH\ DOVRFDQSURWHFWEHQH¿FLDULHVDQGLQVXUHGVIURPWKHSRVVLELOLW\RIRXWOLYLQJWKHLU assets. While some types of life insurance include a savings component that can provide retirement income, life insurance itself isn’t necessarily an investment. But for LQVXUDQFHFRPSDQLHVDQGHVSHFLDOO\OLIHLQVXUHUVSUR¿WDELOLW\LVODUJHO\GHSHQGHQWRQ investment performance. In general, life insurers have enough data surrounding life expectancies and risk classes to determine rates and to accurately predict claims. %HFDXVHDSROLF\FDQUHPDLQLQH൵HFWIRUGHFDGHVOLIHLQVXUHUV¶REOLJDWLRQVWHQGWREH relatively long term. As a result, many insurers invest in longer-duration assets such as long-term bonds and real estate. U.S. Life/Health – 2020 Asset Distribution Source: Aggregates & Averages Life/Health U.S. & Canada 2020 Edition. Securities are reported on the basis prescribed by the National Association of Insurance Commissioners. Real estate $22,980,590 Other investments $30,201,245 *Stock $118,963,122 Derivatives $121,695,446 Contract loans $133,310,983 Cash & short-term investments $156,976,439 Other invested assets (Schedule BA) $235,511,625 Mortgage loans $600,426,073 *Total bonds $3,388,229,857Next >