U.S.'s Biggest Insurer Just Reported Huge Profit Decline - Here's Why

The United States's largest life insurance firm by assets, Prudential Financial, felt the dual sting of the pandemic and low interest rates in 2020. The company posted its first annual loss since 2013, with final figures from 2020 showing a net loss of -$374 million. In the fourth quarter, profit plummeted by -27%, though the company still managed to post net income of $819 million. In the same quarter last year, profit was $1.13 billion.

The pandemic's impact on business is a more obvious reason major U.S. companies felt profit pressure in 2020. Less obvious is why interest falling interest rates would matter to the business. Here's why -- insurance companies like Prudential generally rely on high yielding bonds to generate interest on money being held to pay out benefits. When interest rates fall and earnings on those bonds fall with them, margins get squeezed and the insurance company is less profitable. 

All insurance companies faced the same pressures as Prudential, but some fared better than others. Below, Tickeron's A.I.dvisor runs a full analysis of players in the Insurance industry, with trade ideas to go along with it. Overall, A.I.dvisor is bullish on the sector.