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US individual life premiums record rare Q2 decline

Individual life insurance premiums fell year over year in a second quarter for the first time in more than 10 years.

As the country battled the COVID-19 pandemic during the spring, the industry recorded $36.23 billion in individual life premiums, compared to $36.36 billion in the prior-year period. The decrease was relatively small, but it was the first such year-over-year decline of any kind in a second quarter since 2009.

Overall, total life insurance premiums fell to $45.74 billion for the three months ended June 30, down almost 2% from a year earlier.

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Affiliates of Northwestern Mutual Life Insurance Co. remained the largest writers of life insurance in the U.S. during the quarter ended June 30. The Wisconsin-based mutual insurer had $3.95 billion in total life premiums during the second quarter, down 2.5% from the prior-year period.

MetLife Inc. lagged behind Northwestern Mutual, and was the second-largest underwriter of life insurance in the quarter. The insurer's total premiums dropped year over year by roughly 3% in the second quarter, as group and individual premiums both fell during the period.

Aside from Northwestern Mutual and MetLife, eight of the 15 largest U.S. life underwriters also reported lower year-over-year premiums in the second quarter. The five groups that recorded gains were the affiliates of Securian Financial Group Inc., Mutual of Omaha Insurance Co., State Farm Mutual Automobile Insurance Co., Guardian Life Insurance Co. of America and Prudential Financial Inc.

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Individual life insurance refers to term insurance and all forms of permanent insurance (e.g., universal, variable, index universal, whole) and is reported as ordinary within NAIC statutory statements. Often offered through the workplace, group life insurance is typically term insurance and allows members of a group to purchase coverage up to a certain level without the need for underwriting.

S&P Global Market Intelligence uses statutory total life premiums to determine market share. Total premium is a preferred indicator of market share as it reflects not only new business but also the persistency of a company's existing business in the form of renewal premiums. Additionally, many policyholder acquisition costs are not recovered within one year. As such, total premium can also be a better indicator of profitability for life insurers, whereas new sales do not necessarily equate with profitability.