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Conning: Life Insurer Investment Returns Inch Up

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Life insurers’ investment returns rose to 6.02% in 2005, from 5.93% in 2004, after falling in every previous year since 2001.

Analysts at Conning Research & Consulting Inc., Hartford, discuss the modest increase in returns in a review of life insurer investment portfolios.

Life insurers have suffered because bond interest rates were low from 2001 to 2004, and life insurers have invested more than 80% of their assets in bonds, Conning analysts note.

Life insurers invest assets in 6 categories of assets.

Despite low bond rates, the percentage and amount of life insurance company assets invested in bonds increased between 2001 and 2005, the analysts report.

The only other asset category that grew both in terms of dollar value and share of life insurer assets was the “Schedule BA” category, the analysts report.

Schedule BA assets include surplus notes, oil and gas partnerships, private equity partnerships, venture capital investments and hedge fund investments.


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