by John Darer® CLU ChFC MSSC RSP CLTC
If you have a structured settlement or are considering a structured settlement and the current level of economic uncertainty is causing you some concern about all things financial, consider this commentary from A.M.Best;
"Defying a host of economic challenges, financial impairments in the (life insurance) segment have appeared to reach their lowest point in half a century in terms of number and frequency in 2011". Emphasis added.
Source: Insurance Company Facts and Stats 2012 Edition, published November 12, 2012.
That's the lowest in the industry since 1962. when many Baby Boomers were still in diapers!
Some of my other observations from the excellent A.M. Best publication:
A. The Life Insurance Groups that issue Structured Settlement Annuities Are Among The Top U.S. insurers in Terms of 2011 Admitted Assets
1. Metropolitan Life & Affiliated Companies
includes current structured settlement annuity issuer Metropolitan Life Insurance Company and reinsurer MetLife Insurance company of Connecticut
2. Prudential of America Group
3. Manulife Financial
includes current structured settlement annuity issuers John Hancock Life Insurance Company (U.S.A.) and John Hancock Life Insurance Company of New York
5. Sun America Financial Group
includes current structured settlement annuity issuers (American General Life Insurance Company, United States Life Insurance Comapny in the City of New York and former issuers, Variable Annuity Life Insurance Company ("VALIC") and Western National.
6. New York Life Group
7.Hartford Life Group
includes former structured settlement annuity issuer Hartford Life Insurance Company
9.ING USA LIfe Group
includes former structured settlement annuity issuer Security Life of Denver
10. AEGON USA Group
includes former structured settlement annuity issuers Monumental Life, Transamerica Life, Transamerica Occidental, Commonwealth, People's Security Life
B. The Life Insurance Groups that issue Structured Settlement Annuities Are Among The Top U.S. insurers in Terms of 2011 Capital & Surplus (what's left over after liabilities are deducted from assets)
2. Metropolitan Life
3. New York Life Group
5. Sun America Financial Group
6. Mass Mutual Financial Group
includes former structured settlement annuity issuer Massachusetts Mutual Life Insurance Company
7. Prudential of America Group
8. AEGON USA Group
9. ING USA LIfe Group
The A.M. Best report presents an assessment of the challenges facing life insurers
- How to match returns guaranteed to policy holders without taking too much risk in their investment portfolios.
- Exposure to commerical mortgages, commerical mortagge backed securities amd home-equity asset-backed securitgies exceds 20% of total industry invested assets.
- Product development in the retirement security area and how it may impact growth
While recognizing the challenges Best observes "As the recent financial crisis has demonstrated , secure-rated companies have the capital to withstand a reasonable amount of investment losses"
Consider this List of Recessions in the United States since 1797 along with the dates that many of the companies currently and formerly offering strctured settlement annuities were founded. While each financial crisis has its own set of risk characteristics, some of these companies could easily say "been there done that". They, and other life insurers who do not write structured settlement annuities but write other financial products that are important to financial planning, settlement planning estate planning, long term care and wealth management, have proven the ability to stand the test of time.
New York Life 1845
John Hancock Life 1862
Met Life 1868
Pacific Life 1868
Liberty Mutual 1912, backs Liberty Life Assurance Company of Boston 1964
United States Life Insurance Company in the CIty of New York 1919
Allstate Life 1931
It is worth pointing out that banks have had a far worse history of failure than insurers issuing structured settlement annuities from 2008-2011.
Problembanklist.com stated on January 12, 2012
"For perspective on the size of the failed banking assets held by the FDIC consider the following comparisons.
- Total assets of the 92 banks that failed during 2011 totaled $36 billion.
- The FDIC Deposit Insurance Fund (DIF) currently has a balance of only $7.8 billion which provides insurance protection on a staggering $6.78 trillion in deposits".