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Portfolio > Economy & Markets > Fixed Income

Weiss: Weak Investment Returns Plague Annuity Issuers

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NU Online News Service, Aug. 25, 2003, 5:33 p.m. EDT – Eighty-seven life insurers earned too little investment income in 2002 to fund their annuity reserves at an adequate level, according to Weiss Ratings Inc., Palm Beach Gardens, Fla.

The coverage ratio, or ratio of annuity investment income to annuity reserve income needs, fell at many life insurers and was below 0.91 at 10 large, well-known life insurers, Weiss says.

Large, well-capitalized insurers can overcome dips in annuity investment income by shifting investment income from other products or from operating profits, but, if investment income remains low, some companies might default on their annuity contracts, Weiss says.


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