OLDWICK, N.J.--(BUSINESS WIRE)-- Publicly traded life and annuity companies are feeling wide ranging impacts from volatile equity, fixed-income and housing markets, affecting not only financial statements but business strategies. Executive teams are rethinking investment allocations and evaluating impairments while retooling their product portfolios and operating plans.

• Most publicly traded life and annuity companies recognized net realized and unrealized losses in 2008 and through first quarter 2009.
• Net investment income generally has declined, reflecting weakness in institutional spread based business and decreasing short-term interest rates.
• The slide in equity markets through first quarter 2009 has cut sales, fee-based revenues and assets under management.
• Credit spreads have narrowed and assets under management have inched upward as markets hint at the possibility of a recovery.
• Access to the capital markets has normalized, enabling life insurers to raise both equity and debt to shore up their balance sheets.
• Controlling expenses has become critical, and several companies have reduced staff to adjust to expected levels of future activity.
• Individual life sales are down more than 25% for the industry, as the severity of the current recession has had a dramatic and unusual impact on the top line for many of the major writers.
• Management is focusing on building capital, emphasizing core product lines and growing organically rather than by acquisition.
• Fundamentals remain solid across the industry's major lines of business, with the exception of variable annuities and asset management.
• Both persistency and mortality have held up fairly well, but A.M. Best expects disability claims/loss ratios to increase materially.

Access a copy of this special report. BestWeek subscribers can download a PDF copy of all special reports as well as the associated spreadsheet data. Non-subscribers can access an excerpt of each special report and purchase individual reports and spreadsheet data.


Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Company

Analysts:

Rosemarie Mirabella, 908-439-2200, ext. 5892

rosemarie.mirabella@ambest.com

or

Andrew Edelsberg, 908-439-2200, ext. 5182

andrew.edelsberg@ambest.com

or

Public Relations:

Jim Peavy, 908-439-2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, 908-439-2200, ext. 5378

rachelle.morrow@ambest.com

Source: A.M. Best Company