NU Online News Service, March 29, 2004, 4:49 p.m. EST – U.S. life and health insurers are reporting strong profits for the first 9 months of 2003.[@@]
The insurers’ total profits increased to $18.1 billion during that period, up from $3.3 billion during the first 9 months of 2002, according to Weiss Ratings Inc., Jupiter, Fla.
The stock market rebound helped. Although life and health insurers lost $4.2 billion on investments sold or written off during the first 3 quarters of 2003, that was down from $9.6 billion in investment losses “realized” during the comparable period in 2002.
Some life and health insurers improved results by rearranging their operations so that they could cut reserves, Weiss says.
Total U.S. life and health company reserves fell to $101.5 billion Sept. 30, 2003, down 10% from the total recorded Dec. 31, 2002. The drop in industry reserves amounted to about two-thirds of the increase in industry profits, according to Weiss figures.
A handful of big life and health insurers accounted for more than 80% of the drop in reserves, Weiss reports.
Some insurers reduced reserve requirements by letting new sales fall. At some insurers, a shift toward more conservative benefit guarantees and cuts in the interest rates paid on new policies also reduced reserve requirements, says Melissa Gannon, a Weiss vice president.
“Time will tell if the rest of the industry will follow suit,” Gannon says.