Pacific Mutual Annual Income Shows Third Successive Decline

Pacific Mutual Life Insurance Co. reported a 39.6% drop in net operating income last year, the third consecutive annual decline since the Newport Beach company posted record earnings in 1983.

The company’s $9.3-million net income last year was down from $15.4 million in 1985 and off nearly 70% from the record $30.8 million in 1983.

Executives at Pacific Mutual, the nation’s 25th-largest insurance company, blame the lower profits on higher sales costs, higher policy reserves for future benefits, increased payments for policyholders’ health care, pension fund adjustments and more competition on premiums.

Because the company is a mutual organization, owned by its policyholders, the net income was put into contingency funds, raising that account--after deductions taken during the year--by 4.1% to $233.5 million from $224.2 million in the previous year.

Pacific Mutual’s assets at the end of the year were $5.5 billion, a 19.6% increase from $4.6 billion a year earlier. The company had $30.7 billion of life insurance in force at the end of the year, a 13.7% increase from $27 billion of life insurance in force a year earlier.

The company also had $12.9 billion in funds under management at the end of the year, a 22.8% increase over the $10.5 billion under management a year earlier. The funds included investment money for the company as well as for outside clients.