AM Best has maintained a stable outlook for the US life and annuity insurance segment, citing steady top-line growth alongside strong capital and risk-adjusted capital levels.
In its report, the agency said the segment has continued to build surplus and uphold balance sheet strength following several years of elevated growth.
Although surrender activity has increased amid interest rate shifts, AM Best noted that insurers’ asset-liability matching practices and liquidity stress testing have helped them manage those pressures.
The report also pointed to concerns about the quality of capital and assets. AM Best said greater use of reinsurance and offshore structures to hold reserves on a more economic basis may influence overall balance sheet quality. On the investment side, insurers continue to seek assets with lower risk-adjusted capital charges, contributing to the shift.
Recent sales activity provides a better background for the current landscape. LIMRA reported that individual life insurance results in Q3 2025 were notably strong, with new annualized premiums rising 16% year-over-year to $4.3 billion and policy counts increasing 10%.
Growth across whole life, indexed universal life and variable universal life suggests continued demand for a range of products even as companies adjust pricing and product design.
Operating performance has also been steady across many carriers. “While life sales have slowed in growth from the post-COVID bump, annuity sales continue to surge with record results in the last few years,” said Erik Miller, senior director at AM Best. He added that growth may not continue at the same pace and noted that increased competition could bring stronger pressure on product guarantees, crediting rates and investment strategies.
Previously, Moody’s reported that Q2 earnings for the US life sector reflected steady equity markets and resilient margins in disability and other lines. The ratings agency said performance could strengthen through the remainder of the year if current conditions hold.
AM Best also observed that new entrants and additional capital have helped reshape the segment’s business profile. The repricing and sale of legacy blocks have contributed to a de-risking of product portfolios and supported capital management efforts.
Reinsurance continues to play a growing role in that process. Recent analysis shows rising use of sidecars and other reinsurance-linked vehicles by life and annuity writers, particularly as higher annuity volumes increase reserve demands. These structures have offered companies flexibility in balancing capital requirements while maintaining underwriting discipline.
The agency also highlighted a renewed focus on enterprise risk management across the industry, noting that insurers are incorporating issues such as cybersecurity, vendor oversight and reputational exposures into broader frameworks as they operate across more varied corporate and regulatory structures.
