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February 25, 2004 at 07:00 PM
NU Online News Service, Feb. 25, 2004, 6:48 p.m. EST – Some big insurers could be having trouble with fixed annuity earnings.[@@]
Peter Porrino, an insurance specialist at Ernst & Young L.L.P., New York, suggests in an industry review that the difference between what some insurers are paying fixed annuity holders and what the insurers are earning on the investments backing the annuities is below the level that FA issuers have required to earn an acceptable return.
In the past, FA issuers have required a spread close to 2 percentage points, Porrino writes.
Porrino says some of the insurers who had spreads at that level even in the second quarter of 2003, when spreads plummeted, include units of Jefferson-Pilot Corp., Greensboro, N.C.; John Hancock Financial Services Inc., Boston; Lincoln National Corp., Philadelphia; and MetLife Inc., New York.
