Publicly traded US life insurers reported steady operating profitability in Q2 2025, supported by stabilizing equity markets and resilient disability margins, according to Moody’s Ratings.
While mortality experience was mixed, lower claim severity in disability insurance contributed to earnings. Operating results rose 5% from the previous quarter but were down 3% from a year earlier.
Life insurance sales increased 8.6% sequentially and 7.2% year-on-year, while annuity sales climbed 5% quarter-over-quarter but slipped 5.3% on an annual basis. The market for registered index-linked annuities (RILAs) remained strong, offsetting economic uncertainty. Companies also maintained disciplined capital returns to shareholders.
Moody’s also noted that profitability is likely to strengthen further in the second half of the year as seasonal expenses ease and equity markets maintain momentum. Alternative investment performance has begun to improve following earlier volatility.
Risk transfer remained an important theme, highlighted by Corebridge Financial’s move to reinsure its individual retirement variable annuities to Venerable Holdings. Insurers also continued to use Bermuda structures to enhance capital efficiency, underscoring the growing role of cross-border financial strategies in the sector.
Partnerships with alternative asset managers are becoming increasingly significant for life insurers, Moody’s said. The White House’s order to expand access to private market investments in 401(k) plans is expected to deepen collaboration between asset managers and insurers.
In Q2, Voya Financial and Blue Owl Capital launched a partnership to develop private markets products for defined contribution plans, while Manulife announced an agreement to acquire 75% of Comvest Credit Partners, expanding its private credit capabilities by $14.7 billion. These moves follow earlier collaborations between insurers and investment managers, reflecting the convergence of insurance and alternative asset strategies.
Outside the US, Moody’s highlighted robust capital levels for insurers operating in Japan ahead of the country’s adoption of the economic solvency ratio (ESR) framework in 2026. Disclosures suggest that US life insurers active in Japan are well positioned under the new regime.
The results stand in contrast to the US property and casualty sector, where several carriers reported weaker Q2 earnings due to higher catastrophe losses and ongoing claims inflation. Life insurers’ reliance on investment performance and disciplined risk transfer helped cushion results, underlining a relative resilience compared with their P&C peers.
