Conning -- Life Insurer Investments Under Pressure

Analysis of life insurers' assets and investments as reported at year-end 2011 reveals an industry pressured by the continued lowest interest rates seen since the 1950s, according to "Life Insurance Industry Investments: Under Pressure in 2011," a new study by Conning.

"Our analysis of life insurers' investment profile through 2011 and into 2012 indicates that insurers are continuing to respond to the long term low interest rate environment," said Mary Pat Campbell, analyst at Conning. "While most of the negative impacts of the financial crisis faded in 2011, the continued policy of low interest rates from the Federal Reserve took its toll on fixed income yield, and is now being recognized and responded to as a longer term challenge."

The Conning Research study, "Life Insurance Industry Investments: Under Pressure in 2011," analyzes life industry investments for the period 2007-2011 for the industry as a whole and for four underwriting market peer groups. Further, the study also provides detail regarding the industry's position at the start of 2012 and analyzes how the prolonged low interest rate environment and other challenges may influence insurers' strategic investment decisions in the future.

"On a positive note, insurers have worked hard in the aftermath of the crisis to rebuild capital positions and improve leverage," said Stephan Christiansen, director of research at Conning. "Additionally, many have repositioned their product portfolios to reduce risks in their liabilities going forward. Consequently, they have some room to take additional risk in pursuit of yield."