The ways in which the investment losses of 2008 negatively affected the earnings and capital levels of the life insurance industry are explored in a new report from New York-based Fitch Ratings.

The report, "Analyzing Changes in Statutory Capital for U.S. Life Insurers,"  reviews statutory capital and risk-based capital ratio changes experienced in 2008 for the top 25 U.S. life insurance groups.

Fitch says that among these 25 companies, which represent more than 80% of the admitted assets for the life insurance industry, the average decline in reported statutory capital was 13% in 2008. This number stands in stark contrast to the average annual increase of 6% recorded over the previous five years and the nominal 1% decline recorded during the last market and economic downturn of 2001 and 2002.

Interestingly, the survey did detect a wide variance among companies. Indeed, changes in statutory capital ranged from an increase of 11% to a decline of 52% for individual groups.


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