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French Life Industry Looks Stable

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NU Online News Service, March 20, 2003, 11:24 a.m. EST – The French life insurance industry looks stable, thanks to a stable operating environment and the insurers’ emphasis on investing in high-rated bonds, according to a market review from the Paris office of Moody’s Investors Service.

Life insurers in many European countries have been quicker than U.S. life insurers to invest in stocks. Now that world stock markets have slumped, the rating agencies have worried about the effects of investment losses on the insurers’ solvency.

In France, the stock slump and decline in bond yields are hurting life insurers’ profits, but they should not have a material effect on many insurers’ solvency, Moody’s says.

Moody’s is recommending that life insurers protect themselves against tough times by lowering policyholder bonus rates.