September 02, 2003 at 08:00 PM
NU Online News Service, Sept. 2, 2003, 1:34 p.m. EDT – Total profits for U.S. life and health insurers fell to $2.8 billion for the first quarter, down from $4.5 billion for the first quarter of 2002, according to Weiss Ratings Inc., Palm Beach Gardens, Fla.
Reserve increases and investment losses helped force industry profits down to the lowest level in at least 10 years, Weiss says.
Although many life insurers reported big improvements in investment earnings and overall earnings during the second quarter, the companies suffered a $2.8 billion loss on investments sold, written down or written off during the first quarter, compared with a $1.7 billion capital loss for the first quarter of 2002.
Meanwhile, increases in claims rates and reductions in the asset-return assumptions that insurers built into claim reserve calculations during the first quarter forced U.S. life and health insurers to add $42 billion to reserves, up from $28 billion, Weiss says.
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