State Farm, Prudential, Nationwide Rise in Fortune 500 List
June 12, 2017 by Warren S. Hersch
State Farm and Prudential Financial each moved up a couple of notches, while MetLife dipped two, among the top-ranking life insurance and annuity manufacturers in the 2017 Fortune 500 list. Of the top 12 carriers, five others improved their rankings relative to 2016, including (in order of ranking) Nationwide, Northwestern Mutual, USAA, TIAA and Aflac.
In the 33rd spot (up from 35th) is State Farm, with $76.1 billion in revenue in 2016. The company’s profits fell 94.4% last year — to $400 million from $6.2 billion in 2015 — the dip attributed to “high auto insurance claims costs.” The underwriting loss forced State Farm last month to close 11 offices and lay off 4,200 workers, or 6% of its nearly 70,000 employees, according to Bloomberg.
The company’s life insurance units reported premium income of $5.7 billion, up from $5.5 billion in 2015. The Bloomington, Ill.-based insurer still derives the lion’s share of revenue from P&C sales (mostly auto and home) pegged at $59.2 billion last year.
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In 42nd place (down from 40th) is industry behemoth MetLife, which boasts a market capitalization of $57.4 billion and employs 58,000 workers worldwide.
Fortune applauds the insurer’s pending spin-off of Brighthouse Financial, believing that the divestiture will provide the “cash infusion and distance from trouble at the unit” needed to boost earnings ($800 million last year) and increase the carrier’s penetration into the expanding market for employee benefits, including group insurance and employee-paid, voluntary products.
Nipping at MetLife’s heels in the 48th spot (up from 50th) is Prudential Financial. Though boasting $58.8 billion in revenue and assets totaling $784 billion, the company witnessed a 22.6% decline in profit (to $4.4 billion) last year, nearly half of this total generated by Japan-based units. Fortune attributes the earnings decline to interest rate-induced “earnings pressure” on investment yields.
Occupying 55th place (down from 49th in 2016) in Fortune’s list is AIG. Last year, the multiline titan reported $52.4 billion in revenue, a 10.2% decline from 2015; and a significant 138.7% dip in earnings. The company, writes Fortune, is banking that the appointment of a new CEO, Brian Duperreault, will help reverse the insurer’s sagging fortunes, and do so without having to spin off divisions, including its life insurance unit.
In 65th (down from 61st) is New York Life. One of the nation’s oldest mutual insurance companies (founded in 1845), the company reported $40.8 billion in revenue last year (a 11.1% dip from 2015) and $1.1 billion in profit (a whopping 324.1% increase).
Contributing to the robust earnings, Fortune notes, were record-setting sales for its flagship life insurance and annuity products ($1.3 billion and $13 billion, respectively). The company also managed to boost reserves (to $23.3 billion) while still providing hefty dividends ($1.8 billion) to the company’s policyholders.
Just three notches down in the pecking order (in 68th place, up from 69th) is multiline insurer Nationwide. Though still primarily a property & casualty insurer (life insurance premiums, at $930 million in 2016, paled in comparison to P&C premiums of $18.9 billion), Nationwide significantly boosted its presence in the annuity space with its blockbuster $4.7 billion acquisition in 2016 of Jefferson National.
The merger gave Nationwide access to thousands of RIAs and other fee-based financial professionals who sell Monument Advisor, Jefferson National’s flat-fee based variable annuity. In 2016, Nationwide reported sales of $43 billion. Dipping 42.4% last year, profits stood at a $334.3 million.
Also noted on Fortune’s rankings are these life insurance and annuity manufacturers: Liberty Mutual (75th, down from 73rd), MassMutual (77th, down from 76th), TIAA (80th, up from 82nd), Northwestern Mutual (97th, up from 100th), USAA (102nd, up from 114th) and Aflac (126th, up from 135th).
This year marks the 63rd year of the Fortune 500 list, which ranks 500 of the largest U.S. corporations by revenue. The companies collectively represent two-thirds of U.S. gross domestic product (GDP), $12 trillion in revenues, $890 billion in profits and $19 trillion in market value.
See the full Fortune 500 list here.
