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THE INSURANCE INDUSTRY
Glossary: A short list of insurance industry terms.
Chapter 1: Major Trends Affecting the Insurance Industry. This chapter presents an encapsulated view of the major trends that are creating rapid changes in the insurance industry today.
Chapter 2: Insurance Industry Statistics. This chapter presents in-depth statistics ranging from industry mergers to life insurance company assets to health insurance data and much more.
Chapter 3: Important Insurance Industry Contacts – Addresses, Telephone Numbers and World Wide Web Sites. This chapter covers contacts for important government agencies, insurance organizations and trade groups. Included are numerous important World Wide Web sites.
THE INSURANCE 300
Chapter 4: THE INSURANCE 300: Who They Are and How They Were Chosen. The companies compared in this book (the actual count is 323) were carefully selected from the insurance industry, largely in the United States. 66 of the firms are based outside the U.S. For a complete description, see THE INSURANCE 300 indexes in this chapter.
Individual Data Listings:
Look at one of the companies in THE INSURANCE 300's Individual Data Listings. You'll find the following information fields:
The company profiles are in alphabetical order by company name. Ifyou don't find the company you are seeking, it may be a subsidiary or division of one of the firms covered in this book. Try looking it up in the Index by Subsidiaries, Brand Names and Selected Affiliations in the back of the book.
Industry Group Code: An NAIC code used to group companies within like segments. (See Chapter 4 for a list of codes.)
Ranks Within This Company's Industry Group: Ranks, within this firm's segment only, for annual sales and annual profits, with 1 being the highest rank.
A grid arranged into six major industry categories and several sub-categories. A "Y" indicates that the firm operates within the sub-category. A complete Index by Industry is included in the beginning of Chapter 4.
Types of Business:
A listing of the primary types of business specialties conducted by the firm.
Major brand names, operating divisions or subsidiaries of the firm, as well as major corporate affiliations—such as another firm that owns a significant portion of the company's stock. A complete Index by Subsidiaries, Brand Names and Selected Affiliations is in the back of the book.
The names and titles up to 27 top officers of the company are listed, including human resources contacts.
The firm's full headquarters address, the headquarters telephone, plus toll-free and fax numbers where available. Also provided is the World Wide Web site address.
Annual Sales (2006 or the latest fiscal year available to the editors, plus up to four previous years): These are stated in thousands of dollars (add three zeros if you want the full number). This figure represents consolidated worldwide sales from all operations. 2006 figures may be estimates or may be for only part of the year—partial year figures are appropriately footnoted.
Annual Profits (2006 or the latest fiscal year available to the editors, plus up to four previous years): These are stated in thousands of dollars (add three zeros if you want the full number). This figure represents consolidated, after-tax net profit from all operations. 2006 figures may be estimates or may be for only part of the year—partial year figures are appropriately footnoted.
Stock Ticker, International Exchange, Parent Company: When available, the unique stock market symbol used to identify this firm's common stock for trading and tracking purposes is indicated. Where appropriate, this field may contain "private" or "subsidiary" rather than a ticker symbol. If the firm is a publicly-held company headquartered outside of the U.S., its international ticker and exchange are given. If the firm is a subsidiary, its parent company is listed.
Total Number of Employees: The approximate total number of employees, worldwide, as of the end of 2005 (or the latest data available to the editors).
(The following descriptions generally apply to U.S. employers only.)
A "Y" in appropriate fields indicates "Yes."
Due to wide variations in the manner in which corporations report benefits to the U.S. Government's regulatory bodies, not all plans will have been uncovered or correctly evaluated during our effort to research this data. Also, the availability to employees of such plans will vary according to the qualifications that employees must meet to become eligible. For example, some benefit plans may be available only to salaried workers—others only to employees who work more than 1,000 hours yearly. Benefits that are available to employees of the main or parent company may not be available to employees of the subsidiaries. In addition, employers frequently alter the nature and terms of plans offered.
NOTE: Generally, employees covered by wealth-building benefit plans do not fully own ("vest in") funds contributed on their behalf by the employer until as many as five years of service with that employer have passed. All pension plans are voluntary—that is, employers are not obligated to offer pensions.
Pension Plan: The firm offers a pension plan to qualified employees. In this case, in order for a "Y" to appear, the editors believe that the employer offers a defined benefit or cash balance pension plan (see discussions below).The type and generosity of these plans vary widely from firm to firm. Caution: Some employers refer to plans as "pension" or "retirement" plans when they are actually 401(k) savings plans that require a contribution by the employee.
• Defined Benefit Pension Plans: Pension plans that do not require a contribution from the employee are infrequently offered. However, a few companies, particularly larger employers in high-profit-margin industries, offer defined benefit pension plans where the employee is guaranteed to receive a set pension benefit upon retirement. The amount of the benefit is determined by the years of service with the company and the employee's salary during the later years of employment. The longer a person works for the employer, the higher the retirement benefit. These defined benefit plans are funded entirely by the employer. The benefits, up to a reasonable limit, are guaranteed by the Federal Government's Pension Benefit Guaranty Corporation. These plans are not portable—if you leave the company, you cannot transfer your benefits into a different plan. Instead, upon retirement you will receive the benefits that vested during your service with the company. If your employer offers a pension plan, it must give you a summary plan description within 90 days of the date you join the plan. You can also request a summary annual report of the plan, and once every 12 months you may request an individual benefit statement accounting of your interest in the plan.
• Defined Contribution Plans: These are quite different. They do not guarantee a certain amount of pension benefit. Instead, they set out circumstances under which the employer will make a contribution to a plan on your behalf. The most common example is the 401(k) savings plan. Pension benefits are not guaranteed under these plans.
• Cash Balance Pension Plans: These plans were recently invented. These are hybrid plans—part defined benefit and part defined contribution. Many employers have converted their older defined benefit plans into cash balance plans. The employer makes deposits (or credits a given amount of money) on the employee's behalf, usually based on a percentage of pay. Employee accounts grow based on a predetermined interest benchmark, such as the interest rate on Treasury Bonds. There are some advantages to these plans, particularly for younger workers: a) The benefits, up to a reasonable limit, are guaranteed by the Pension Benefit Guaranty Corporation. b) Benefits are portable—they can be moved to another plan when the employee changes companies. c) Younger workers and those who spend a shorter number of years with an employer may receive higher benefits than they would under a traditional defined benefit plan.
ESOP Stock Plan (Employees' Stock Ownership Plan): This type of plan is in wide use. Typically, the plan borrows money from a bank and uses those funds to purchase a large block of the corporation's stock. The corporation makes contributions to the plan over a period of time, and the stock purchase loan is eventually paid off. The value of the plan grows significantly as long as the market price of the stock holds up. Qualified employees are allocated a share of the plan based on their length of service and their level of salary. Under federal regulations, participants in ESOPs are allowed to diversify their account holdings in set percentages that rise as the employee ages and gains years of service with the company. In this manner, not all of the employee's assets are tied up in the employer's stock.
Savings Plan, 401(k): Under this type of plan, employees make a tax-deferred deposit into an account. In the best plans, the company makes annual matching donations to the employees' accounts, typically in some proportion to deposits made by the employees themselves. A good plan will match one-half of employee deposits of up to 6% of wages. For example, an employee earning $30,000 yearly might deposit $1,800 (6%) into the plan. The company will match one-half of the employee's deposit, or $900. The plan grows on a tax-deferred basis, similar to an IRA. A very generous plan will match 100% of employee deposits. However, some plans do not call for the employer to make a matching deposit at all. Other plans call for a matching contribution to be made at the discretion of the firm's board of directors. Actual terms of these plans vary widely from firm to firm. Generally, these savings plans allow employees to deposit as much as 15% of salary into the plan on a tax-deferred basis. However, the portion that the company uses to calculate its matching deposit is generally limited to a maximum of 6%. Employees should take care to diversify the holdings in their 401(k) accounts, and most people should seek professional guidance or investment management for their accounts.
Stock Purchase Plan: Qualified employees may purchase the company's common stock at a price below its market value under a specific plan. Typically, the employee is limited to investing a small percentage of wages in this plan. The discount may range from 5 to 15%. Some of these plans allow for deposits to be made through regular monthly payroll deductions. However, new accounting rules for corporations, along with other factors, are leading many companies to curtail these plans—dropping the discount allowed, cutting the maximum yearly stock purchase or otherwise making the plans less generous or appealing.
Profit Sharing: Qualified employees are awarded an annual amount equal to some portion of a company's profits. In a very generous plan, the pool of money awarded to employees would be 15% of profits. Typically, this money is deposited into a long-term retirement account. Caution: Some employers refer to plans as "profit sharing" when they are actually 401(k) savings plans. True profit sharing plans are rarely offered.
Highest Executive Salary: The highest executive salary paid, typically a 2005 amount (or the latest year available to the editors) and typically paid to the Chief Executive Officer.
Highest Executive Bonus: The apparent bonus, if any, paid to the above person.
Second Highest Executive Salary: The next-highest executive salary paid, typically a 2005 amount (or the latest year available to the editors) and typically paid to the President or Chief Operating Officer.
Second Highest Executive Bonus: The apparent bonus, if any, paid to the above person.
Apparent Women Officers or Directors: It is difficult to obtain this information on an exact basis, and employers generally do not disclose the data in a public way. However, we have indicated what our best efforts reveal to be the apparent number of women who either are in the posts of corporate officers or sit on the board of directors. There is a wide variance from company to company.
Hot Spot for Advancement for Women/Minorities: A "Y" in appropriate fields indicates "Yes." These are firms that appear either to have posted a substantial number of women and/or minorities to high posts or that appear to have a good record of going out of their way to recruit, train, promote and retain women or minorities. (See the Index of Hot Spots For Women and Minorities in the back of the book.) This information may change frequently and can be difficult to obtain and verify. Consequently, the reader should use caution and conduct further investigation where appropriate.
Growth Plans/ Special Features:
Listed here are observations regarding the firm's strategy, hiring plans, plans for growth and product development, along with general information regarding a company's business and prospects.
A "Y" in the appropriate field indicates "Yes."
Primary locations outside of the headquarters, categorized by regions of the United States and by international locations. A complete index by locations is also in the front of this chapter.
How to Use This Book
Chapter 1: Major Trends Affecting the Insurance Industry
1) Introduction to the Insurance Industry
2) Aging Populations Create Challenges and Opportunities for the Insurance Industry
3) Selling Insurance to Consumers in Discount Stores May Grow
4) Sophisticated Risk Management and Prevention Programs Lead to Lower Losses
5) Independent Agencies Continue to Dominate Commercial Insurance, but Play a Lesser Role in Personal Lines
6) Direct Selling and E-Commerce Grow
7) Technology Drives Efficiencies in Back Office Tasks, Underwriting, Agency Networks and Customer Service
8) Homeowner’s Insurance Passes More Risk to the Policy Holders and Relies on Sophisticated Risk Analysis Tools to Set Rates
9) Insurance Industry Reform May Be on the Horizon
10) Insurance Industry Mergers and Acquisitions Continue
11) No End in Sight to the Growth of Specialized Insurance Lines
12) Variable Annuity Accounts Top $1.8 Trillion in the U.S., While Costs and Sales Practices are Scrutinized
13) Major U.S., Japanese and European Insurance Firms See Vast Promise in the Chinese Market
14) Continued Rise in Health Care Costs
15) Employers Push Health Care Costs onto Employees
16) Health Savings Accounts and Health Reimbursement Accounts Gain Traction
17) Growing Use of Managed Care by Medicare
18) Malpractice Suits Are Blamed for Rising Health Care Costs/Tort Reform Is Capping Awards for Damages
19) Medicare Changes Include Drug Benefits for Seniors/Medicare Advantage Offers Private Fee for Service Plans
20) Hedge Funds Enter the Reinsurance Field in a Big Way
Chapter 2: Insurance Industry Statistics
Insurance Industry Overview
Employment in the U.S. Insurance Industry: 1996-2006
Top 25 Global Insurance Companies by Revenues, 2005
Top 10 U.S.- Based Publicly-Traded Insurance Companies by Revenues, 2005
Annual Merger & Acquisition Deal Volume, U.S. Insurance Industry: 2000-2006
Largest U.S. Insurance Industry Merger & Acquisition Deals, 2005
Top 10 Global Life Insurance Companies by Revenues, 2005
Assets and Liabilities of U.S. Life Insurance Companies: 2000-2006
Top 10 Global Property and Casualty Companies by Revenues, 2005
Assets and Liabilities of U.S. Property-Casualty Insurance Companies: 2000-2006
Top 10 Global Health Insurance Companies by Revenues, 2005
The Nation's Health Dollar, 2006 Where It Came From (Estimated)
Medicare Deductible, Co-Payment and Premium Amounts, 2007
Employers' Costs for Health Insurance, Amount and Percent of Total Compensation, U.S.: Selected Years 2002-2006
Percent of Persons under Age 65 with Public Health Plan Coverage and Private Health Insurance Coverage, by Age Group, U.S.: 1997-2005
People without Health Insurance for the Entire Year, U.S.: 2003, 2004 and 2005
Typical U.S. Automobile Insurance Costs per Year, 2006
Chapter 3: Important Insurance Industry Contacts
(Addresses, Phone Numbers and World Wide Web Sites)
Chapter 4: THE INSURANCE 300:
Who They Are and How They Were Chosen
Industry List, With Codes
Index of Rankings Within Industry Groups
Index of Headquarters Location by U.S. State
Index of Non-U.S. Headquarters Location by Country
Index by Regions of the U.S. Where the Firms Have Locations
Index by Firms with Operations Outside the U.S.
Individual Data Profiles on Each of THE INSURANCE 300
Index of Hot Spots for Advancement for Women/Minorities
Index by Subsidiaries, Brand Names and Selected Affiliations