The 2018 Structured Settlement Production Report– Part 2

This is part two of a five part series regarding the 2018 Structured Settlement Report - be sure to read parts I, III, IV and V.

 

Part 1 of The Chronicle’s series analyzing the 2018 Structured Settlement Production Report, recently published and distributed by Melissa Price, Ringler’s Chief Strategy and Business Development Officer, asked the following question: does it merit celebration or concern?

The Chronicle’s answer: it depends on your perspective.

The good news: 2018 sales totals represent the first time since 2008 the structured settlement market has reported annual annuity premium in excess of $6 billion and an increase of 8.45% over the 2017 totals. Note: the 2018 reported numbers include only NSSTA annuity providers. Independent Life entered the structured settlement market as a de novo company April 23, 2018. We joined NSSTA in 2019. Therefore our 2018 annuity premium sales are not included in the 2018 Industry Report.

The cause for concern: In 2002 (17 years ago), annual structured settlement annuity sales totaled $6.14 billion – exceeding 2018 annual sales by $120 million!

Subsequent articles in this five part series will: 1) discuss the causes for this regressive 16-year structured settlement sales cycle; 2) question whether NSSTA’s primary objective currently is to improve and grow the structured settlement market or protect and preserve a business model; and 3) recommend the most promising and fundamental structured settlement growth strategy.

First, however, here is some additional information with analytical value from Melissa Price’s historical reporting:

  • NSSTA had 22 annuity provider members (life companies) in 2002 vs. 8 annuity provider members at the end of 2018.
  • Of those 22 annuity providers, American General, MetLife, New York Life, Pacific Life, and Prudential Life continue in the market today.
  • American General, the leading annuity provider by far in 2002, wrote $1.18 billion of structured settlement annuity premium in 2002 (19% of the industry total) and $286 million in 2018 (5% of the industry total).
  • Melissa Price’s Reports began showing the number of cases and average premium per case in 2008 – the last year, prior to 2018, annual structured settlement annuity premium exceeded $6 billion. Comparing 2008 to 2018:
    • The number of cases structured annually has declined from 35,371 to 26,227.
    • The average case premium has increased from $176,036 to $229,511.
  • 2018 sales results by individual annuity providers (rounded by millions)
    • Berkshire Hathaway: $1510
    • Pacific Life: $1260
    • MetLife: $1060
    • Prudential Life: $915
    • New York Life: $583
    • Amgen/AILife//USL: $286
    • USAA: $234
    • Mutual of Omaha: $129
    • Liberty: $41 – note: Liberty left the market during 2018.
  • Melissa Price’s Report separately reports non-qualified (under IRC 130) structured settlement annuity premium for the years 2006 to 2018.
    • At various times, Liberty Life, Allstate Life, Prudential, and American General each participated in this market.
    • After averaging $175 million of annual annuity premium from 2012 thru 2017, no NSSTA annuity providers reported by Price wrote any non-qualified annuity premium during the final 9 months of 2018 (after Liberty left the market).

Utilizing estimates from legal textbook “Structured Settlements and Periodic Payment Judgments” for industry premium estimates prior to 2002, Melissa Price estimates that a total of $167.50 billion of structured settlement annuity premium has been sold since 1975. The book authors estimate $168 billion of historical premium and 930,600 total cases structured. Here is how the historical estimates compare with the 2018 reported numbers.

Premium and Case Comparison

  • Historical
    • Total Premium (1975-2018) = $168 billion
    • Total Cases = 930,600
    • Average Premium = $180,530
  • 2018
    • Total Premium = $6.0 billion
    • Total Cases = 26,227
    • Average Premium = $229,511

Part 3 of this series will discuss some of the significant industry trends which have contributed to the 17-year regressive sales cycle.