New York Life Announces 2012 Financial Results
New York Life Announces 2012 Financial Results
Company Financial Strength Enhanced by Record Earnings, Surplus Growth
- Operating earnings of $1.6 billion increased 18.4 percent over 2011, a new record high
- Surplus and asset valuation reserve grew by $1.8 billion, or 10 percent, to $19.6 billion, a new record total
- Policyholder benefits and dividends paid rose to $8.1 billion, up 6 percent, an all-time high
- Assets under management grew more than $40 billion to a new record of $381 billion in 2012, an increase of 12.6 percent over 2011
- Individual life insurance in force rose to a new record of $816 billion, an increase of 3.4 percent over the total in 2011
NEW YORK--(BUSINESS WIRE)-- New York Life Insurance Company, America's largest mutual life insurance company1, announced an 18.4 percent increase in 2012 operating earnings to a record $1.6 billion, driven by strong performances in both its Insurance and Investments businesses. The company increased surplus and asset valuation reserve in 2012 to a record $19.6 billion, providing a superior measure of safety and confidence for millions of families and businesses who hold a combined $816 billion of life insurance face value, another new high for New York Life. The company achieved record sales of insurance, annuity and investment products through its primary distribution channel, a national field force of New York Life agents.
"Keeping New York Life a vibrant and growing company is critical to keeping our most vital promise: to be there for our customers when they need us most," said New York Life Chairman and CEO Ted Mathas. "Employees, agents and other partners should be proud of our 2012 performance, which reflects our unwavering commitment to helping families and businesses navigate uncertainty and build a sound financial future for themselves and their loved ones."
Cash Dividends Paid Every Year Since 1854
Mr. Mathas continued, "I'm pleased to note that despite the weak economic environment we announced an 8 percent rise in the dividend being paid to our participating policyholders in 2013, an increase of $100 million over the 2012 payout. This is the 159th consecutive year New York Life has paid a cash dividend, a validation of mutual strength since 1854 and a reflection of our singular focus on creating value for our customers. But perhaps the most important measure of our performance is the $8.1 billion in benefits and dividends we provided last year, money that helped millions of people secure their financial futures and weather the uncertainty and challenges that life brings."
Record Earnings Reflect Strength of Business Model and Operations
Operating earnings, the company's measure to track profitability from ongoing operations, grew 18.4 percent in 2012 to $1.6 billion. This marks the fifth of the last six years where earnings have achieved a new historical record. "This past year again proved the value of our mutual company structure, which enables us to take a long-term approach to investing that keeps the company strong and profitable despite the lackluster economic environment," Mr. Mathas said. "Our earnings benefited from strong performance of our Investments business, which provides a diversified earnings stream that supports our financial strength, and from steps we took to reduce our operating costs by $100 million annually."
Strong Surplus Means Safety for Our Policyholders
In 2012, New York Life achieved 10 percent growth in surplus and asset valuation reserve, a primary measure of financial strength, reaching a record high of $19.6 billion. According to Mr. Mathas, "Maintaining a resilient balance sheet is primary to making sure New York Life keeps its promises to those who rely on us, whether today, tomorrow or generations from now." Mr. Mathas also noted that surplus and asset valuation reserve have become more important following the financial crisis and weak recovery, saying, "We know our policyholders value the peace of mind that comes from doing business with a life insurance company that maintains the highest possible financial strength ratings awarded by the major rating agencies."
Record Agency Sales Drive Business Growth; AUM Leaps More Than 12 Percent
New York Life achieved strong sales growth across all of the company's business in 2012, supported by a career agency system of more than 12,000 agents nationally. Individual recurring premium life insurance sales through agents grew 4 percent over 2011, while annuity sales through agents were up 9 percent. Sales of long-term mutual funds through agents soared 34 percent over the prior year, driven by consistent investment performance from the company's investment boutiques. "Customers continue to find products with guarantees, such as life insurance and income annuities, highly attractive - while our investment products, backed by a strong track record, appeal to individual and retail investors seeking to grow and preserve capital," said Mr. Mathas. Assets under management for New York Life increased 12.6 percent to $381 billion.
Review of Businesses
The Insurance Group features the company's life insurance business in the United States, which has been the core business of New York Life since its founding in 1845. The Group also includes the supplemental distribution channels for the U.S. life business: the direct response business in Tampa, FL, which is the leading direct marketer of life insurance in the U.S. through an endorsed program with AARP geared to its membership; and the Group Membership Association business, which is the largest underwriter of professional association insurance programs in the U.S., covering members of more than 500 associations across the country. Given its closeness to the core U.S. life business, both geographically and strategically, New York Life's operations in Mexico are part of the Insurance Group as well.
In 2012, $4.6 billion in benefits and dividends was paid out to the Group's life insurance policyholders.
The Investments Group includes New York Life Investments, which ranks among the largest asset management firms in the United States. The Group also includes businesses that provide solutions to the retirement income challenge facing Americans, both in the accumulation and income phases of retirement planning.
With $364 billion in assets under management as of December 31, 2012, New York Life Investments and its affiliates provide investment management services to institutional and retail clients, offer retirement plans to corporations, multi-employer trusts and individuals, and deliver guaranteed products to both the qualified and non-qualified markets. New York Life Investments continues to provide superior risk-adjusted performance in managing the majority of New York Life's $180 billion in cash and invested assets.
The Investments Group offers retail mutual funds through its MainStay Funds family. In 2012, the Group set new sales records for MainStay mutual funds sold through New York Life agents. In February 2013, Barron's, the business and financial weekly of Dow Jones, once again recognized the MainStay Funds for delivering long-term results - naming MainStay the #1 fund family for the 10-year period in its annual ranking of mutual fund families. This marked the fourth consecutive year that MainStay ranked in the top three for the 10-year period.
On the annuity side, New York Life continued to lead the industry in providing guaranteed lifetime income, with a 28 percent market share in fixed immediate annuities.2 The Group's other popular solutions included fixed deferred annuities and variable annuities.
Agency Highlights from 2012
The Agency Operation includes the company's primary distribution channel in the United States of more than 12,000 licensed agents located in cities and towns across America. Key highlights of the year include:
- Sales of recurring premium life insurance by agents increased 4 percent to a new record high.
- Agent sales of annuities rose 9 percent over 2011.
- Sales of mutual funds by agents soared 34 percent over the prior year, to a new record.
- The company hired 3,597 full-time agents last year, continuing its strong trend of hiring over the past several years. Since 2007 the company has recorded 11 percent growth of its agent force. In 2012, 62 percent of New York Life's new hires in the field were women or individuals who represent the cultural markets.
- New York Life continued its leadership of the MDRT (formerly known as the Million Dollar Round Table), the industry's most prestigious professional organization for agents, for the 58th consecutive year. The company had 2,157 agents achieve this recognition in 2012, about one-quarter of New York Life's active field force in the United States. New York Life also led the industry in the number of women agents qualifying for MDRT in 2012.
New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings currently awarded to any life insurer from all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody's Investors Service (Aaa), Standard & Poor's (AA+).** Headquartered in New York City, New York Life's family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments*** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit New York Life's website at www.newyorklife.com for more information.
1See footnote on page four for details of Fortune 500 ranking.
2New York Life was the number one seller of fixed immediate annuities in 2012, according to an industry source. Source: LIMRA International, U.S. Individual Annuity Sales Survey, Fixed Immediates, Fourth Quarter YTD 2012 results. (Fixed Immediates include Fixed Period Annuities.)
*Based on revenue as reported by "Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual)," Fortune magazine, May 21, 2012. See http://www.money.cnn.com/magazines/fortune/fortune500/2012/faq/ for methodology.
**Source: Third Party Ratings Reports as of 2/1/13. The financial strength and ratings do not apply to the Investment Divisions of any Variable Universal Life insurance and mutual funds because they are subject to market risks and will fluctuate in value.
***New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.
How Barron's Ranks the Fund Families
To qualify for the Lipper/Barron's Fund Survey, a fund family must have at least three funds in Lipper's general U.S.-stock category, one in world equity (which combines global and international funds), one mixed-equity fund (which holds stocks and bonds), two taxable-bond funds, and one tax-exempt fund. Fund loads and 12b-1 fees aren't included in the calculation of returns because the aim is to measure the manager's skill. Each fund's return is measured against all funds in its Lipper category, resulting in a percentile ranking which is then weighted by asset size relative to the fund family's other assets in its general classifications. Finally, the score is multiplied by the general classification weightings as determined by the entire Lipper Universe of funds.
Source: Barron's, 2/9/13. Overall, MainStay Funds ranked number 56 for the one-year period, 20 for the five-year period, and 1 for the 10-year period ended December 31, 2012, out of 62, 53, and 46 fund families, respectively. MainStay ranked number three for the 10-year period in 2009, 2010, and 2011 from among 48, 46, and 45 fund families, respectively. MainStay ranked number five in the tax-exempt bond category out of 62 fund families for 2012. Past performance is no guarantee of future results, which will vary.For the most recent MainStay Funds performance, please visit our website at mainstayinvestments.com.
MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. The MainStay Funds® are managed by New York Life Investment Management LLC and distributed through NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, NJ 07054, a wholly owned subsidiary of New York Life Insurance Company. NYLIFE Distributors LLC is a Member FINRA/SIPC. For more information about MainStay Funds®, call 800-MAINSTAY (624-6782) for a prospectus or summary prospectus.Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing.The prospectus or summary prospectus contains this and other information about the investment company.Please read the prospectus or summary prospectus carefully before investing.
|New York Life Insurance Company|
|2012 Financial Highlights (in millions)|
|Surplus and Asset Valuation Reserve2||$||19,613||$||17,861|
|Policyholder Benefits and Dividends3||$||8,099||$||7,619|
|Assets Under Management6||$||380,979||$||338,274|
|Individual Life Insurance In Force7||$||816,361||$||789,522|
1 Operating earnings is the measure used for management purposes to track the Company's results from ongoing operations and the underlying profitability of the business. This indicator is based on accounting principles generally accepted in the United States of America (GAAP) with certain adjustments we believe are more appropriate as a measurement approach (non-GAAP). The 2011 amount has been restated primarily to conform to the Company's adoption of new accounting guidance related to Deferred Acquisition Costs, effective January 1, 2012.
2 Statutory surplus and the asset valuation reserve ("AVR") shown is on a consolidated basis of the Company.
3 Policyholder benefits primarily include death claims paid to beneficiaries and annuity payments. Dividends are payments made to eligible policyholders from divisible surplus. Policyholder benefits and dividends reflect the consolidated results of New York Life Insurance Company and its domestic insurance subsidiaries. Intercompany transactions have been eliminated in consolidation. Dividends are not guaranteed.
4 Insurance sales represent annualized first-year premium on participating issued whole life insurance, term life insurance, universal life insurance, long-term care insurance and other health insurance products. A sale is generally counted when the policy is paid. Adjustments are made to reflect the relative importance of certain sales, primarily: single premium sales sold through our agents and Advanced Markets Network (AMN) retail distribution channel, our network of independent agents and brokers, are counted at 10 percent. Sales are generated from both domestic and Mexican operations. 2011 has been adjusted to conform with our 2012 presentation.
5 Investment sales include individual immediate fixed annuities (Guaranteed Lifetime Income), our flexible premium deferred income annuities (Guaranteed Future Income), premium income on our fixed and variable deferred annuities, mutual funds and third-party asset management funds. 2011 has been adjusted to conform with our 2012 presentation.
6 Assets Under Management represents consolidated domestic and international insurance operations assets (cash and invested assets and separate account assets) and third-party assets principally managed by New York Life Investment Management Holdings, LLC, a wholly-owned subsidiary of New York Life Insurance Company. 2011 has been adjusted to conform with our 2012 presentation.
7 Individual life insurance in force is the total face amounts of individual life insurance contracts (term, whole life, and universal life) outstanding for the Company and its domestic insurance subsidiaries at a given time.
The New York State Department of Financial Services recognizes only statutory accounting practices for determining and reporting the financial condition and results of operations of an insurance company. The separate statutory financial statements (including assets, liabilities, and surplus and AVR) for our insurance companies, as well as a copy of the GAAP basis consolidated financial statement and a detailed reconciliation to our non-GAAP performance measure (i.e. Operating Earnings) are available on our website, www.newyorklife.com. Copies of these items are also available by contacting the Secretary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.
KEYWORDS: United States North America New York
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