At Penn Mutual, we are passionate about serving you, our policyholders and we believe that life insurance is central to a sound financial plan. Our team of advisers builds lasting relationships with clients, empowering them to make financial decisions that have a positive impact on their lives, now and into the future.
As a mutual company, we make our decisions with your long-term best interests in mind. We focus on continuously improving and identifying opportunities to elevate the service we provide.
Financial strength makes it possible for us to keep the promises we make to our policyholders and contract owners. In 2018, we paid $1.4 billion in benefits to our policyholders or their beneficiaries, demonstrating our continued ability to deliver on our promises.
In this relationship-based business, the advisers we partner with help clients like you make smart decisions by offering the support, solutions and guidance needed to live life with confidence.
Our mutuality, financial strength, and focus on relationships are foundational, allowing Penn Mutual to build and grow so we will always be here for our policyholders, their families and businesses. As we enter our 172nd year of service, we are proud of the story behind our strength, and how it supports the momentum driving our commitment to you.
One of our foundational elements is, and always will be, our financial strength and stability. That foundation begins with capital strength.
Total Surplus (Capital) was a very strong $2.1 billion as of December 31, 2018. Total surplus is the amount set aside for unexpected losses from operations, and is our financial protection against business volatility. Our surplus position is a testament to our high-quality investment portfolio and our ability to manage the guarantees we provide our policyholders and contract owners through appropriate investment techniques.
As detailed in rating agency outlooks, Penn Mutual remains very well capitalized. Additionally, surplus is one of the key indicators of the company’s long-term financial strength and stability, which helps ensure we continue to meet the future obligations to policyholders.
In 2018, we paid our policyholders $1.4 billion, fulfilling the promises we make through the death benefits, annuity benefits and other benefits available with our products.
Total Statutory Assets Under Management, including the funds we safeguard for our policyholders, was $25.8 billion, an increase of $1.2 billion from 2017.
Total Surplus (Capital), Total Assets, Benefits Paid and Investment Portfolio information are reported according to a statutory accounting basis. Total liabilities were $17.7, $19.0, $20.4, $22.7 and $23.7 billion for years 2014-2018 respectively.
We manage our investments with one goal in mind: to fulfill our obligations to policyholders while protecting the long-term viability of Penn Mutual. Our investment philosophy stresses rigorous asset/liability management diversification, good liquidity, and a conservative approach to portfolio risk. This philosophy has provided us with strong and superior performance for our policyholders. Because of our mutual structure, we can take a longer-term view of the economy, which helps us mitigate market volatility.
- Penn Mutual holds a high-quality portfolio of assets, with investment grade bonds representing the single largest class of investments. As of December 31, 2018, 82.8 percent, or $13.7 billion, of the company’s total invested assets of $16.6 billion (excluding policy loans), represented cash, short-term and investment grade bonds.
- Our second largest asset class, “Other Invested Assets and Alternative Assets,” represents 12 percent of the investment portfolio (excluding policy loans). Included in this growing asset class is our investment in Janney Montgomery Scott LLC, one of our broker-dealer affiliates; investments in limited partnerships, focused on other investment opportunities like venture capital and private equity; investments in private funds; and hedging assets that protect the company against fluctuation in equity markets and interest rates.
Our policyholders can take comfort in knowing that Penn Mutual avoids risk that might jeopardize our ability to keep the promises we make to our valued policyholders.
With an average credit quality rating of A, Penn Mutual holds a higher percentage of NAIC 1 bonds than the industry, as classified by the National Association of Insurance Commissioners (NAIC). And, Penn Mutual holds a lower percentage of below investment grade bonds than the industry.
This is the story behind our strength. You can be confident that your life insurance policy or annuity contract has the full backing of a company with an incomparable record of integrity – a company with a 172-year history of safety, stability and security.
Our results for the 12 months ended December 31, 2018, underscore our continued focus on and commitment to meeting our obligations to our policyholders and contract owners and protecting Penn Mutual’s long-term viability. We achieved solid financial results for the year, following our strong performance in 2017.
Total Revenue for the year was $3.2 billion. This includes premium and product revenue from life and annuity products, investment income on our assets, and broker-dealer fees and commissions, which have shown solid growth over the past five years.
Consolidated Net Income, which includes income from all business segments — Insurance, Broker-Dealer and Asset Management — was a record $333 million, for the year ended December 31, 2018, compared to $232 million in 20171.
Individual Life Insurance In Force, the amount of life insurance protection we provide to policyholders, reached a new high of $156 billion, a very strong 10 percent increase over 2017. This growth demonstrates that policyholders value the protection and living benefits offered by Penn Mutual products based on the advice of their trusted advisers.
Life insurance sales for the year were a record $223 million. This premium measures life sales based on internal formulas for specific products. Individual New Life Premiums were $540 million. Our results are evidence of our belief that life insurance is central to a sound financial plan.
New annuity sales were a strong $427 million in 2018. We continue to manage annuity sales in the current rate environment and the role they play in our clients' financial plans.
For over eight years (2010-2017), Penn Mutual has outpaced the industry in several key categories, measured in compound annual growth rate.