The impact of the financial services meltdown is evident all around the insurance industry. A new survey from Charlottesville, Va.-based SNL Financial leaves no doubt about the wounds the crisis has inflicted on the compensation of C-level insurance executives.

The survey, “Executive Compensation Review for Insurance,” notes that total compensation was down by 11% across all lines of business. Not surprisingly, the most auspicious drop came for executives in the mortgage and financial guarantee sector, where CEOs saw their year-over-year compensation fall by an average of 73% and CFOs saw a 46% reduction. CEOs at multi-line and managed care carriers also took a big hit, recording average reductions of 27% and 24%, respectively. The sole line of business to counter this trend was life and health insurers, whose CEOs recorded a 3% increase.

These numbers do not come as a surprise to Will Retzer, a lead analyst at SNL. "If you look at the complete picture, compensation is really well linked to performance," Retzer tells Insurance Networking News. "Base salary rose across the board for all insurance companies, but total compensation fell."

Retzer notes that at a large insurer, base salary can make up as little as 10% of executive pay, with a similar, shrinking percentage coming in the form of a cash bonus, while more than half comes from equity awards. Indeed, the average percentage derived from equity awards rose to 56% for CEOs in 2008, up from 49% in 2007.

Despite the largely negative tenor of the numbers, Retzer says things could be worse, especially when held up against other sectors. "When I look at insurance, it's not as affected as much as the rest of the financial services industries."

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