A.M. Best revised its rating outlook for the U.S. life/annuity sector to stable from negative, reflecting its view that rating actions are not expected to move profoundly in one direction. The rating agency has observed favorable trends pertaining to credit spreads, asset impairments, balance sheet and product de-risking, access to the capital markets and overall risk management. To a large extent, substantial unrealized loss positions in general account investment portfolios have recovered as of Q1 2010.

Several life insurers have successfully raised capital through debt and equity issuances to fund near-term maturities, decrease leverage, reduce reliance on short-term funding (such as commercial paper or bank debt), and/or contribute capital to their operating subsidiaries, A.M. Best says. This has helped facilitate the substantial increase—greater than 20%—in the industry’s absolute capital from Q1 2009 to Q1 2010.

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