Five-Year Whole Life Insurance Company Investment Yield Trend: 2016 Edition


For five years, we have tracked the investment yield trend of whole life insurance companies and we continue to analyze this data every year because investment income is a primary driver of dividends paid to participating insurance policy holders.

Investment income is not the only contributor to any insurance company’s dividend payout. The other two factors considered each year by the board of directors is

  1.  Claims experience
  2.  Operational Expense

Claims experience plays a much larger role in affecting the overall dividend than operational expense–there simply isn’t large fluctuations in day-to-day operating expenses for companies that have existed for over a century.


We use investment performance data reported in statutory accounting reports published by all insurers domiciled in the United States to compute the five year trend of investment yield on admitted assets. This computation tells us the average change in yield on invested assets over the most recent five year period.

For example, if the result of an insurer for this analysis is -.10% per year that means the insurer has experienced a loss in investment yield of .10% (ten basis points) per year for the last five years.


The results of this analysis are as follows:

2016 Whole Life Investment Yield Trend


Negatives Across the Board

This  is the first year since we started this analysis that all insurers show a negative trend. In years past, only a few insurers achieved average growth in investment yield year-over-year with most insurers having experienced a decline on average. This result is not surprising given the current trend in interest rates across the broader U.S. economy.

Size Doesn’t Seem to Matter Much

The asset pool size of the insurer seems to have little effect on insurers 5 year trend for investment yield. The top five insurers on this list represent a broad range of asset sizes and all but one, New York Life, have experienced single digit decline year-over-year.

However, smaller asset pool sized companies to make up the entirety of the bottom 5 insurers on the list. Dividing the list in half, most of the larger insurers are found in the top 11.

This Trend is Likely to Remain

Interest rates remain low and don’t show major signs of improvement in the short term. As a result, we do not expect this trend to reverse in any major way for the next several years. Insurers will likely continue the trend of moving to somewhat riskier assets where available. This strategy will be more impactful for smaller insurers and then large ones due to sheer scale of overall assets and the impact smaller alternatives investments have on the total pool.

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