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Life insurance industry posts positive net income

Posted On Tue, December 1, 2009

A recent study revealed that the life insurance industry still made money despite the fact that it faces troubles regarding the generation of capital.

According to Conning Research and Consulting, the industry continues to deal with financial losses, which were tied to the country's recent economic difficulties. Terence Martin, an analyst for the consulting firm, said that net after-tax income came in at $16 billion, which is less than half of what was seen prior to the recession in 2007.

"Even with a $16 billion capital infusion in 2009, the industry is still well below pre-crisis 2007 levels, and capital leverage ratios have risen dramatically," Martin said. "The industry will continue to face capital constraints in the short term, even as capital losses abate."

Stephen Christian, director of research for the firm, said that annuities were a source of volatility for life insurance companies and lead to a $4 billion loss during the 2008-2009 period. However, life insurance products remained stable.

According to recent numbers from Beacon Research, sales of fixed annuities fell by about 20 percent during the third quarter of 2009. In all, sales of fixed annuities came to $21.9 billion for the quarter.
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