Life and health insurers’ profits plunged in the first nine months of 2002 to their lowest level in the last decade, according to Weiss Ratings Inc.
The profits of the nation’s life and health insurers fell $5.3 billion, or 61.2 percent, to $3.4 billion during the time period.
Driving the decline in industry earning during the first three quarters was a $9.6 billion capital loss on the sale of investments, compared with a $3.3 billion loss for the same period during 2001. Of the life and health insurers reporting a capital gain or loss, 71 percent posted capital losses as a result of the market’s dismal performance.
These substantial loses restrict the industry’s ability to deliver long-term policy commitments and force the companies to compensate in other ways, particularly by dipping into their capital cushion.
Weiss Ratings Inc., downgraded the ratings of a total of 71 life and health insurance companies and 22 companies received upgrades.
Among the companies downgraded were Manufacturers Life Insurance Co. in Toronto; Allianz Life Insurance Co. of North America, Minneapolis; Kemper Investors Life Insurance Co., Schaumburg, Ill.; Phoenix Life Insurance Co., Enfield, Conn.; and AIG Life Insurance Co., Wilmington, Del.
Among the companies upgraded were Transamerica Life Insurance Co., New York; American Pioneer Life Insurance Co., Orlando, Fla.; Midwest Security Life Insurance Co., Onalaska, Wis.; Life of the South Insurance Company, Nashville, Ga.; and Sierra Health and Life Insurance Co., Las Vegas.
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