Falling interest rates, corporate defaults and debt rating downgrades have caused a steep drop in gross investment returns at life insurers over the past 5 years.[@@]

Analysts at Conning Research & Consulting Inc., Hartford, have published that conclusion in a report on life company investment results.

Gross investment income returns at U.S. life insurers fell to 5.9% in 2004, from 7.5% in 2000, the Conning analysts write.

Insurers cut investment expenses by shifting to cheaper classes of assets, but, as a whole, they do not seem to be increasing use of potentially more lucrative “Schedule BA” asset classes, the researchers write.

Schedule BA asset categories include investments in vehicles such as oil production equipment, transportation equipment, mineral rights, surplus debentures and a variety of joint ventures and partnerships.