Best’s Special Report: Annuity Sales Supporting Growth of U.S. Fraternal Organizations
2024年7月31日 - 11:42PM
ビジネスワイヤ(英語)
Premium levels increased for fraternal organizations on an
aggregate basis in 2023, but still lag behind the overall growth
rate for the U.S. life/annuity industry, according to a newly
issued report by AM Best.
A Best’s Special Report on the fraternal segment notes that on a
direct premium basis, higher interest rates help drive a 16%
increase in annuity premium, but that pace trailed the overall L/A
industry’s 22% growth rate. Net premiums written increased by
approximately 13% to reach $11.9 billion in 2023, up from $10.5
billion in 2022.
“Fraternals have typically focused on expanding distribution and
growing annuity sales, which are attractive products in a rising or
higher interest rate environment,” said Ed Kohlberg, director, AM
Best. “For some, significant new business acquisition costs such as
commissions and required capital charges have negatively impacted
risk-adjusted capitalization.”
According to the report, individual life premium declined by
approximately 1%, but these products remain a focus for the
fraternal segment. This stems from a higher interest rate
environment that can support policyholder dividend rates and make
fraternal products more attractive to consumers when compared with
other companies.
The fraternal population has attempted to remain competitive
with the rest of the L/A industry by guaranteeing higher minimum
interest rates on individual annuity business. The higher crediting
rates generally help limit any significant disintermediation risk
given current interest rates—and fraternals have historically had
more favorable annuity retention rates than the industry. “Members
have strong relationships with their fraternal societies, resulting
in much lower lapse rates,” said Stratos Laskarides, senior
financial analyst, AM Best.
These fraternal organizations are regional insurers and can
account for up to a quarter of the insured lives in more rural
states, highlighting the valuable role these types of companies
play in closing mortality protection gaps in certain areas of the
country. The fraternal industry continues to focus on enhancing
common bonds with members by leveraging technology, launching new
products, and enhancing the member experience when purchasing
insurance products.
To access the full copy of this special report, please visit
http://www3.ambest.com/bestweek/purchase.asp?record_code=345030.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Ed Kohlberg Director +1 908 882 1979
edward.kohlberg@ambest.com
Stratos Laskarides Senior Financial Analyst +1
908 268 1008 stratos.laskarides@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 882 2318 al.slavin@ambest.com