I've worked for a life insurance company who priced their life insurance in a way where they lost money. Phoenix life insurance. Their universal life insurance lost money and created arbitrage if the policy was minimally funded. A few banks found that out and bought policies on all their consumers and almost bankrupted the company. This made Phoenix almost go under. Luckily they diversified and their annuities department covered the loss of their life insurance department (just barely). So the point is they diversity and don't always go under.