Profits of the nation's life and health insurers jumped $14.8 billion, or 437%, to $18.1 billion in the first nine months of 2003, the best third-quarter increase in a decade, according to Weiss Ratings Inc., a Jupiter, Fla.-based independent provider of ratings and analyses of financial services companies, mutual funds and stocks.Driving the industry's steep profit growth, the change in reserves fell to $101.5 billion for the first three quarters of 2003, an $11.8 billion decline compared to the $113.3 billion change in reserves reported for the same period in 2002. The five life and health insurers responsible for nearly 90% of the changes in reserves were Kemper Investors Life Insurance Co., General Electric Capital Assurance Co., Prudential Insurance

Company of America, Teachers Insurance & Annuity Association, and Transamerica Life Insurance Co.

With the equity market continuing its upward momentum, life and health insurers enjoyed a $10.1 billion unrealized capital gain on investments, which led to a 16.8% increase in capital and surplus, from $224.9 billion at September 30, 2002, to $262.8 billion at September 30, 2003. Life and health insurers reporting the largest increases in capital and surplus were: Metropolitan Life Insurance Co., American General Life Insurance Co., Sunamerica Life Insurance Co., Teachers Insurance & Annuity Association, and AIG Annuity Insurance Co.

Among the 924 insurers recently reviewed by Weiss, 16 companies were upgraded and 20 were downgraded.

Notable upgrades include:

  • Equitable of Colorado Inc. (Col.) from C+ to B-
  • Great American Life Assurance Co. of Puerto Rico from C+ to B-
  • Union Fidelity Life Insurance Co. from C+ to B-

Notable downgrades include:

  • Canada Life Assurance Co. (U.S. Branch) from C to D+
  • Texas Life Insurance Co. from B to C+
  • United Fidelity Life Insurance Co. from D to E+

Source: Weiss Ratings Inc.

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