By Matt Reilly, Managing Director - Insurance Solutions

The U.S. life and annuity industry entered 2026 from a position of strength. Earnings growth has supported higher surplus levels and stronger balance sheets, while individual annuity sales reached new records. Sales of registered index-linked annuities (RILAs) and fixed indexed annuities (FIAs) have been particularly strong, supported in part by favorable demographic trends. Conning believes that recent indicators suggest that 2026 may be another strong sales year. 

Individual life insurance has also performed well. New annualized life insurance premiums increased 10% to more than $17.5 billion, while the number of policies sold rose 7%.¹ At the same time, elevated book yields and strong returns from alternative and other risk assets have continued to support industry earnings. 

However, the operating environment is evolving. Industry success is attracting new entrants and additional capital, increasing competitive pressure and the need for product differentiation. At the same time, potential lower interest rates or further spread compression could weigh on product demand and investment yields. Growing allocations to private credit and other less liquid or complex assets are also drawing increased scrutiny. 

Against this backdrop, Conning believes that investment strategy may become an increasingly important differentiator for life and annuity insurers. Carriers have access to a broader range of investment opportunities, but must balance return objectives with liquidity, capital efficiency, asset-liability management and risk across the portfolio. How insurers navigate these trade-offs may have a meaningful effect on their ability to sustain profitable growth as market conditions evolve. 

Understanding the forces reshaping life and annuity portfolios will therefore be critical as insurers position themselves for the next phase of the market cycle.

Life Insurer Asset Allocations Continue to Evolve

Click here to continue reading Conning’s Viewpoint, “The Next Phase of Life Insurance Investing: Balancing Opportunity, Complexity and Capital."

Footnotes

1. ©2026 S&P Global Market Intelligence

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