US life industry still feeling impact of financial crisis says Conning



The US life-annuity industry is still struggling to shake off the impact of the financial crisis of 2008 and the resulting significant decreases in assets and surplus, according to a new report by Conning Research and Consulting.

"Preliminary results for 2008 indicate that the life insurance industry had a statutory net loss of $51bn, and that ending surplus plus AVR dropped 13% to $273bn," said Terence Martin, analyst at Conning Research & Consulting. "Our latest forecast for the life-annuity industry projects net operating gain to recover, but realized and unrealized capital losses will continue to challenge the industry at least through 2009. While the industry will show a net statutory operating gain in 2009, it will be far below the robust levels of 2003 through 2007."

Conning's semi-annual "Life-Annuity Forecast & Analysis by Line of Business" offers a comprehensive and up-to-date industry forecast and commentary for key lines of business and the industry as a whole.


"Despite possible negative short term impacts from some of the issues looming over the industry-such as the need to rebuild capital and changing regulations-our longer term view of the life insurance industry is favourable," said Stephan Christiansen, director of research at Conning. "We project that surplus plus AVR will increase 23% to $337bn by 2011 as the industry adapts to the new environment and due in part to additional capital paid in to the industry. Additionally, we forecast premium growth through 2011 based in part on demand stimulated by estate planning, a focus on savings and more conservative protection needs, and by a need for more stable investment alternatives."