Tax Policy:

Information on the Stock and Mutual Segments of the Life Insurance Industry

GGD-88-88FS: Published: Sep 26, 1988. Publicly Released: Sep 26, 1988.

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In response to a congressional request, GAO provided information on life insurance companies to determine: (1) the taxes they paid from 1984 through 1986; and (2) their business trends for those years.

GAO found that: (1) as of December 31, 1986, mutual insurance companies had 53 percent of the industry's total assets, while stock companies had 47 percent; (2) stock companies' assets increased at a greater rate than mutual companies' assets; (3) mutual companies had 46 percent of the industry's insurance in force, while stock companies had 54 percent; (4) although both increased their force at the same rate in 1985, mutual companies increased at a greater rate during 1986; (5) in 1986, mutual companies had 46 percent of the premium income for the industry, while stock companies had 54 percent; (6) mutual companies' premium income increased at a slightly greater rate than stock companies' from 1984 through 1986; (7) mutual companies had 38 percent of the new insurance, while stock companies had 62 percent; (8) mutual companies' new insurance issued increased at a greater rate than stock companies' from 1984 through 1986; and (9) for 1986, mutual companies' net investment yield was 7.67 percent, while stock companies' net investment yield was 8.63 percent. GAO also found that: (1) from 1984 through 1986, mutual companies' federal income taxes, including tax on capital gains, increased at a greater rate than that of stock companies; (2) in 1986, mutual companies incurred a total of $2.4 billion in federal income taxes, while stock companies incurred a total of $2.3 billion; and (3) total 1986 federal income taxes included $3.2 billion on realized capital gains, which was significantly higher than the combined 1984 through 1985 tax of $1.2 billion.

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