Moody’s: Life Insurance Industry Outlook Stable

Moody’s changed its outlook on the life insurance industry to stable from negative. The rating agency tracked 19 U.S. life companies for its report, "Financial Flexibility of U.S. Life Insurers Improves as Debt and Equity Markets Recover: 1Q10 versus 1Q09."

Almost all of the 19 U.S. life companies tracked in this report posted positive operating earnings and net income during the first quarter of 2010. In all, the group's operating income increased $9 billion over first quarter 2009; its net income increased $11 billion.

Another indication of improvement is a precipitous drop in investment impairments for these companies. These were down by nearly 74% year over year.

Moody's details several measures of the increasingly positive view the capital markets have of these insurers. Life insurers' credit default swap (CDS) spreads decreased by an average of more than 1,100 basis points for eight companies that Moody's tracked from the first quarter of 2009 to the first quarter of 2010.