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Weiss: First Half Life Profits Down 42%

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NU Online News Service, Dec. 3, 4:18 p.m. – Weiss Ratings Inc., Palm Beach Gardens, Fla., says U.S. life and health insurers generated a total of $8 billion in profits for the first half, down 42% from total profits for the first half of 2000.

The decrease in profits is due to a $3.1 billion drop in operating profits, along with a $2.2 billion loss on investments sold during the half, Weiss says.

The overall return on equity to 7.3%, Weiss adds.

Industry results could look worse for the second half, now that a recession has started and the Sept. 11 attacks have hit the economy, the firm concludes.

Meanwhile, Weiss warns, drops in U.S. interest rates are decreasing returns on general account investments, and the recession increases the risk that some of the bonds in life insurer portfolios will go bad.

Falling investment returns and higher bond default rates could cause problems for issuers of fixed annuities, Weiss says.