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.
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"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."
1See footnote on page four for details of Fortune 500 ranking.
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."
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By GlobalDataStrong 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
Insurance Group
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.
Investments Group
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.
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.)
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.
