For many decades there was little reason to question the supposition that insurers could reliably transmute premium dollars into a profitable stream of investment income. Then came the financial crisis of 2008 that overturned many long-standing nostrums (efficient-market hypothesis, anyone?) and created a wave of economic and political uncertainty from which insurers are still struggling to cope.

While most insurance industry investment portfolios have rebounded in tandem with the burgeoning equity markets, it is unclear when the industry will be able to generate the levels of returns seen prior to the crisis. Moreover, given what we now know about the volatility of global finance, whether the improvement in the insurance industry's capital position is qualitative or merely quantitative, remains to be seen. Today's safe bet may well be tomorrow's toxic asset.

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