A.M. Best Report - Life & Annuity Company update

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A.M. Best Special Report: Life/Annuity Companies Adjust to Volatile Markets








OLDWICK, N.J.--(BUSINESS WIRE)-- Publicly traded life and annuity companies are feeling wide ranging impacts from volatile equity, fixed-income and housing markets, affecting not only financial statements but business strategies. Executive teams are rethinking investment allocations and evaluating impairments while retooling their product portfolios and operating plans.





  • Most publicly traded life and annuity companies recognized net realized and unrealized losses in 2008 and through first quarter 2009.

  • Net investment income generally has declined, reflecting weakness in institutional spread based business and decreasing short-term interest rates.

  • The slide in equity markets through first quarter 2009 has cut sales, fee-based revenues and assets under management.

  • Credit spreads have narrowed and assets under management have inched upward as markets hint at the possibility of a recovery.

  • Access to the capital markets has normalized, enabling life insurers to raise both equity and debt to shore up their balance sheets.

  • Controlling expenses has become critical, and several companies have reduced staff to adjust to expected levels of future activity.

  • Individual life sales are down more than 25% for the industry, as the severity of the current recession has had a dramatic and unusual impact on the top line for many of the major writers.

  • Management is focusing on building capital, emphasizing core product lines and growing organically rather than by acquisition.

  • Fundamentals remain solid across the industry's major lines of business, with the exception of variable annuities and asset management.

  • Both persistency and mortality have held up fairly well, but A.M. Best expects disability claims/loss ratios to increase materially.


Access a copy of this special report. BestWeek subscribers can download a PDF copy of all special reports as well as the associated spreadsheet data. Non-subscribers can access an excerpt of each special report and purchase individual reports and spreadsheet data.





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