American life and annuity net income rises to $40 billion

Mashrukh Khan: The U.S. life and annuity industry posted a 34% year-over-year increase in net income to nearly $40 billion in 2025, marking the largest total in the last five years, according to AM Best.

Preliminary results from statutory statements, covering an estimated 93% of the industry’s premiums and annuity considerations, showed total income rising 13% from the prior year. This growth was driven by a $101.2 billion surge in other income, largely from substantial reserve adjustments on reinsurance ceded at American General Life Insurance Company and Athene Annuity and Life Company. Net investment income also contributed, climbing 8% amid higher portfolio yields.

Total expenses increased by 13%, with general insurance and other expenses jumping 66%. Despite the expense rise, the pretax net operating gain reached $51.8 billion, a 22% improvement over 2024. A 15.7% reduction in taxes helped offset higher realized capital losses, resulting in the strong bottom-line gain.

The performance reflects sustained demand for retirement products, favorable investment conditions, and effective reinsurance strategies that bolstered reserves.

Industry analysts note that robust capitalization and steady annuity sales supported these results, even as the sector navigated a complex economic environment. The $40 billion net income underscores improved profitability and positions the life/annuity sector on solid footing entering 2026.