The life insurance industry is still working through capital losses and capital constraints resulting from the 2008 financial crisis with some success, according to a new study by Conning Research and Consulting, Hartford, Conn.
"We project net after-tax statutory income of $16 billion for 2009—less than half the pre-crisis figure of 2007—despite capital losses of $20 billion in the year," said Terence Martin, analyst at Conning Research & Consulting. "Even with a $16 billion capital infusion in 2009, the industry is still well below pre-crisis 2007 levels, and capital leverage ratios have risen dramatically. The industry will continue to face capital constraints in the short term, even as capital losses abate."
The Conning Research study, "Life-Annuity Forecast & Analysis 2009-2011," reviews and projects performance for the U.S. life-annuity industry and its key lines of business.
"Underpinning our 2009 forecast is a substantial partial release of the large reserves the industry set up in 2008 for individual annuity minimum guarantees," said Stephan Christiansen, director of research at Conning. "Annuities have been the volatile segment for the industry, generating a $4 billion loss for the combined 2008-2009 period, compared to a $12 billion gain in 2007 alone. Life insurance products, on the other hand, have been remarkably stable during the crisis, and this year will generate over $8 billion of net operating gain-in line with prior years."
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