A.M. Best has released a new report: "Life/Annuity Review & Preview 2010: Life Insurers Take Stock and Lay Groundwork for Recovery.

In the report, A.M. Best indicates that they are continuing their negative outlook on the life/health industry. The life insurance industry so far has survived the financial crisis-bruised certainly-but generally healthier than its financial services peers. The industry's asset side and capital strength was most notably affected. While capital measures have stabilized, A.M. Best believes that challenges remain that are driven by macroeconomic issues. Additionally, other less obvious trends may have greater, longer-term negative effects on insurers.

Among the issues addressed: Investments-Insurers' investment portfolios have yet to generate the full measure of expected losses, based on GAAP financial data and results of A.M. Best's industry survey. This view reflects concerns regarding sustainability of any positive economic trends, as well as the potential for volatile equity markets and the investment risk within commercial real estate. Life Reinsurance-A.M. Best's outlook for this segment is stable as reinsurers generally have been less affected by the financial crisis and have not underwritten the same level of risk as the direct writers. Individual Life-Precipitous sales declines have been exacerbated by some larger participants in this market having had to limit new business due to capital constraints and reserve funding issues. Individual Annuities-A.M. Best views the near-term prospects for overall individual annuity sales as limited given narrowing corporate bond spreads, generally "in-the-money" book of variable annuities industry-wide and less competitive choices for these products. Accounting & Regulatory-A.M. Best believes that many of the initiatives to provide near-term capital relief for the industry have removed some of the conservatism inherent in reserve and risk-based capital requirements. A.M. Best also is concerned with weak life insurance sales and in-force growth as well as the industry's overall shift to less creditworthy products. Sustainability of operating performance, stabilization of investment portfolios and some growth in absolute statutory capital levels will be required as precursors to a rating outlook change to stable. 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.

Source: Investment Weekly News

Moody's Rating Services has released a report on Life Insurers 2009 Fourth Quarter Results - which finds that that Life Insurance Companies are stronger than a year ago.

New York, February 24, 2010 -- In general, quarterly operating earnings of U.S. life insurers have been stabilizing or improving during 2009, and -- despite some variability -- the fourth quarter affirmed that trend, Moody's Investors Service says in a new report.

There are several reasons for the industry's healthier financial condition. The rating agency cites a crucial external one -- the less volatile and higher levels of the equity markets, which have taken much of the pressure off GAAP and statutory earnings. Also, companies have been actively adjusting the risk profiles of their variable annuity products, both through re-pricing and product design changes.

Life insurance sales, which declined by record levels in the early part of 2009, have stabilized and — in some cases — have begun to increase. Annuity sales in the fourth quarter either held steady with the third quarter of 2009 or saw a small pick-up.

"In general, Q4 2009 results were in line with our expectations and the guidance provided by the insurers," states Vice President Ann Perry, the report's author. She explains that several companies posted stronger Q4 versus Q3 2009 net income (Genworth, Hartford, MetLife, Protective, Prudential, Torchmark), driven by a combination of lower investment losses and stronger operating earnings. Almost all companies posted stronger net income for Q4 2009 compared with Q4 2008.

"The industry's earnings improvement since early 2009 is an encouraging sign that the very worst in investment losses is likely over," Ms. Perry says. In addition, she thinks that it demonstrates business lines are stabilizing and that they are positioned for future growth. "However," the analyst adds, "we believe that returns on equity will be less robust going forward and that the rate of future earnings growth will be less than the industry has experienced in the past."

Despite the improved performance in Q4 2009 results, Moody's continues to maintain its negative outlook for the sector; it expects a gradual and uneven recovery — one hobbled by the weak economy and by constrained internal capital generation at the life companies.

Although investment losses are showing signs of leveling off or declining in certain sectors, such as corporate bonds and alternative investments, the rating agency points out that losses in commercial real estate-related investments are now increasing. "Although we expect investment losses to decline from the extremely high levels of 2008 and 2009," Ms. Perry states, "they are likely to remain well above the historical average throughout 2010."

The report is titled "Moody's Comments on U.S. Life Insurers' Q4 2009 Earnings."

Tony Steuer, CLU - Life Insurance Consultant

It appears that the Life Insurance sector will continue to have some issues to contend with in 2010. Fitch Ratings has just released a report titled: 2010 Rating Outlook Negative for U.S. Life Insurance Sector. Fitch Ratings continued to have a negative rating outlook for the U.S. Life insurance market. Factors contributing to this outlook include: operating fundamentals that remain under pressure, the fragile nature of the economic recovery, further expected deterioration in the commercial real estate market, and lower coverage metrics. Still, Fitch Ratings expects that the heightened level of rating downgrades experienced in 2009 will moderate materially in 2010. Please click here to go the Fitch Website for the full report.

It’s always important when obtaining a new policy or reviewing a current policy to check ratings with all rating services and review any other applicable financials for the life insurance company. For more information to meet your situation, please visit my website at www.tonysteuer.com

Tony Steuer, CLU - Life Insurance Consultant

Author: Questions & Answers on Life Insurance

Last week, A.M. Best Company issued a special report outlining its views on the investment environment for U.S. life/health insurers titled, “Mixed Signals: Has the Economy Begun Its Recovery?” A.M. Best believes that, despite signs of economic recovery, financial institutions’ loan portfolios have yet to generate the full measure of expected losses, and that same potential holds true for U.S. life/health companies.

A.M. Best states that as we enter 2010, it appears the deepest U.S. recession in decades is showing some signs of improvement. A.M. Best accepts the consensus view of respected economists surveyed in a report from the National Association for Business Economics, which states the U.S. economic recovery has begun. Credit spreads have narrowed
considerably for most asset classes, especially corporate bonds, non-housing related asset-backed securities and
agency mortgage-backed securities.

However, even though some pressure on life insurers’ invested assets has alleviated, A.M. Best is maintaining its
negative rating outlook on the life/health industry, given its perspective on the credit cycle and the potential
negative impact on life insurance companies’ asset portfolios. A.M. Best’s view reflects concern regarding the
sustainability of the positive trends (i.e., the shape of the economic recovery), as well as the potential for volatile
equity markets and headline investment risk within commercial real estate as the credit cycle unwinds.

A.M. Best believes economic growth is likely to be moderate and that it will be several years before the economy
returns to “normal.” This belief is underpinned by the fact that unemployment is expected to remain at elevated
levels; there is continued potential for further deterioration in financial institutions’ loan portfolios; and there is
limited flexibility with respect to interest rates as they are at historical lows.

To order the report, please visit the A.M. Best Web Site at www.ambest.com


Tony Steuer, CLU - Life Insurance Consultant

Author: Questions & Answers on Life Insurance

With all the mergers and changes in the life insurance industry, it can be a challenge to locate a lost policy. The following are a couple of ways to look for a policy:

1) The National Association of Insurance Commissioners offers a free resource on their site (www.naic.org)
which recommends the following steps:

• If you have the life insurance policy, find the full legal name of the insurance company that issued the policy, along with the company's mailing address and phone number. If the phone number is no longer active, you should contact the insurance department in the insurance company's home state. That insurance department will have records of the company's current name, mergers, and other changes, so that you will know which company to contact. NAIC provides a map with links to state insurance departments, at • http://www.naic.org/state_web_map.htm
• If you do not have the insurance policy, perhaps you know the company's name, and the state where the policy was purchased. If so, then use the same map linked above to locate that state's insurance department, which will have records of the company's current name, mergers, and other changes, so that you will know which company to contact.
• NAIC also provides a short questionnaire (https://eapps.naic.org/orphanedpolicy/) that can help you determine which state insurance department to contact for assistance.

PLEASE NOTE THAT STATE INSURANCE DEPARTMENTS DO NOT HAVE RECORDS OF SPECIFIC INSURANCE POLICIES. HOWEVER, THEN CAN ASSIST YOU IN LOCATING THE APPROPRIATE INSURANCE COMPANY, AND/OR BY REFERRING YOU TO A LIFE INSURANCE POLICY LOCATOR.

2) The Medical Information Bureau (MIB) also has a policy locator service (which they charge a fee for) on their web site at http://www.mibsolutions.com/lost-life-insurance/ - their web site states that that this is effective about 30% of the time.

Of course, there’s always Google. Do your own research before you pay. And good hunting.

Tony Steuer, CLU - Life Insurance Consultant

Author: Questions & Answers on Life Insurance