Detailed Financial Results

Highlights

  • Total surplus (including the asset valuation reserve) finished the year at an all-time high of $25.2 billion, an increase of $1.5 billion. The result is even with a one-time $1.2 billion reduction in surplus related to net deferred tax assets due to the recent enactment of tax reform and a lower corporate federal income tax rate. The company expects the tax law changes to be a long-term positive that will benefit earnings beginning in 2018.
  • The highest ever new life insurance premium at $886 million, alongside total premium revenue of $17.9 billion for insurance and annuity products.
  • A record $125.1 billion of client assets under management for investment products and services — up 25 percent from 2016.
  • Total assets of $265 billion, which included growth of the General Account investment portfolio to $225.5 billion, an increase of $11.9 billion since year-end 2016.
  • Low life insurance unit costs, a reflection of continued, disciplined expense management.
  • Total revenue of $28.1 billion and total assets of $265.0 billion.
  • $10.3 billion in benefits paid to policyowners and their beneficiaries.
  • An expected total dividend payout of $5.3 billion to policyowners in 2018, one of the highest payouts in the company’s history.1 Approximately 85 percent of dividends paid to traditional permanent life insurance along with expected dividends on individual disability insurance ($377 million) and annuities ($67 million).

1Decisions with respect to the determination and allocation of divisible surplus as dividends each year are left to the discretion and sound business judgment of the company's Board of Trustees. There is no guaranteed specific method or formula for the determination or allocation of divisible surplus. Accordingly, the company's approach is subject to change. Neither the existence nor the amount of a dividend is guaranteed on any policy in any given policy year.

Summary of Operations

(Statutory basis, in millions)

Years ended December 31:

2017

2016


Premiums

$17,897

$17,915

Net investment income

9,541

9,605

Other income

649

632


Total revenue

28,087

28,152


Policyowner benefits paid

10,332

9,798

Increase in benefit reserves

8,471

9,166

Commissions and expenses

3,120

3,134


Total benefits and expenses

21,923

22,098


Gain before dividends and taxes

6,164

6,054


Policyowner dividends

5,338

5,205


Gain before taxes

826

849

Income tax benefit

(98)

(176)


Net gain from operations

924

1,025

Net realized capital gains (losses)

93

(215)


Net income

$1,017

$810

The summarized financial statement above was prepared on the statutory basis of accounting. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles (“GAAP”).

Summary of Financial Position

(Statutory basis, in millions)


December 31, 2017

December 31, 2016


Bonds

$146,945

$139,795

Mortgage loans

35,750

34,198

Policy loans

17,421

17,150

Common and preferred stocks

5,929

4,256

Real estate

2,356

2,468

Other investments

14,665

13,463

Cash and short-term investments

2,469

2,300


Total investments

225,535

213,630


Other assets

7,052

8,318

Separate account assets

32,462

28,559


Total assets

$265,049

$250,507


Policy benefit reserves

$195,279

$186,483

Policyowner dividends payable

5,335

5,205

Other liabilities

6,788

6,583

Separate account liabilities

32,462

28,559


Liabilities (excluding AVR)

239,864

226,830


Asset valuation reserve (AVR)

4,334

3,447

Surplus

20,851

20,230

Surplus and AVR

25,185

23,677


Total liabilities and surplus

$265,049

$250,507

The summarized financial statement above was prepared on the statutory basis of accounting. Financial statements prepared on the statutory basis of accounting differ materially from financial statements prepared in accordance with generally accepted accounting principles (“GAAP”).