NU Online News Service, Dec. 18, 5:09 p.m. – Poor investment returns and low interest rates will continue to hurt life insurer ratings, Standard & Poor’s, New York, predicts in its 2003 industry outlook.
U.S. life insurers were bruised by corporate credit defaults in 2002, and investment-grade bonds, which make up about two-thirds of the industry’s total investment portfolio, declined even more than in 2001, when the Enron scandal broke, S&P analysts observe.
The steep decline in interest rates since the end of 2000 is also taking its toll, squeezing the spread between what life insurers earn on their investments and the returns they have promised policyholders, the analysts add.