Moody’s reports publicly traded U.S. life insurers closed Q4 2025 with solid but uneven operating profitability as the lift from higher interest rates tapered off. Yields stabilized. Spread expansion slowed.
Sequential results softened for several carriers, driven by narrower spreads in certain annuity products and elevated claims in select lines. Year-on-year comparisons remained positive.
Retirement solutions, asset management and other capital-light units carried earnings weight.
Aggregate operating income across Moody’s-rated insurers fell 14% quarter on quarter, yet rose 7% from a year earlier. The quarterly dip reflects normalized rates, tighter annuity spreads and more typical benefit experience.
Equity market performance and reinvestment income helped offset weaker outcomes in interest-sensitive and capital-intensive businesses.
Net income reached $8.3 bn in Q4, up sequentially but below Q4 2024. Strong investment income did most of the work. Alternative assets delivered mixed results. Private credit performed well.
Commercial real estate, especially office exposure, lagged and continues to draw scrutiny.
Investment income held steady from the prior quarter and increased modestly year on year. Insurers still benefit from reinvestment yields above legacy portfolio returns, though the incremental boost from rising rates has faded.
According to our data, most large carriers now focus less on rate momentum and more on asset allocation discipline.
By year-end 2025, the U.S. 10-year Treasury yield hovered in the mid-4% range. Moody’s expects it to remain between 4% and 5% in 2026 as the curve normalizes and monetary easing progresses gradually.
Higher rates support spread products but increase disintermediation risk for interest-sensitive liabilities. Carriers have responded through diversification, liability management and a shift toward less rate-sensitive offerings.
U.S. equity markets posted strong gains in 2025, with the S&P 500 near record highs and volatility moderate.
Insurers with sizable asset management arms, including Equitable Holdings, Principal Financial Group, Ameriprise Financial, and Voya Financial, recorded higher assets under management, positive inflows and elevated performance fees.
Foreign exchange movements added volatility. The U.S. dollar weakened against major currencies through much of 2025 before stabilizing.
Japanese yen swings stood out. Moody’s flags FX exposure as a recurring earnings variable for MetLife, Aflac Incorporated and Prudential Financial although hedging programs and diversified revenue streams temper the impact.
Pension risk transfer activity remained strong. Plan sponsors continued to offload liabilities. Principal Financial Group, Inc. reported robust deal flow.
MetLife executed large transactions in the U.S. and UK. Corebridge Financial cited growth in institutional reserves tied to PRT and guaranteed investment contracts. Moody’s expects demand to hold into 2026.
Individual life sales weakened sequentially and year on year, though company performance diverged. Globe Life expanded premiums through agent network growth.
Primerica faced softer sales amid affordability pressure. Lincoln National Corporation benefited from improved mortality and alternative investment returns despite lower volumes.
Annuity growth concentrated in market-linked products with downside protection, especially registered index-linked annuities and fixed indexed annuities.
Prudential Financial, Corebridge Financial and Lincoln National Corporation emphasized capital-efficient structures with lower rate sensitivity. Industry data cited by Moody’s show total annuity sales increased year on year, with indexed products capturing share.
Shareholders’ equity remained stable quarter on quarter and higher than a year earlier. Earnings retention and balance sheet optimization supported capital levels.
Many carriers continued to divest interest-sensitive blocks, reinsure legacy books and expand capital-light businesses. Dividends and buybacks stayed measured, broadly in line with prior years.
Japan remains material and occasionally volatile. Aflac Incorporated posted modest premium declines but improved benefit ratios. Prudential Financial encountered operational disruption and temporarily suspended new sales, with expected earnings pressure in 2026. MetLife reported steadier performance across Asia.
Artificial intelligence initiatives advanced mainly in underwriting, claims and service operations. Voya Financial, Aflac Incorporated and Primerica accelerated AI deployment to streamline workflows and reduce expenses rather than chase top-line growth. Technology exposure within investment portfolios remains limited and diversified.
Moody’s expects sector earnings to hold broadly steady in 2026. Product mix shifts, capital allocation and cost control will carry more influence than rate tailwinds. We think the easy gains from rising yields are gone. Execution now matters more.
