“The 100 largest U.S. life insurance companies, comprising 84% of industry assets, reported net capital losses of $77 billion in the first 9 months of 2008, equal to 25% of their $307 billion of total surplus funds at the beginning of 2008,” according to Frederick S. Townsend and Laurie Dallaire in a December 15, 2008 National Underwriter article.

Townsend, who is president of Townsend Independent Actuarial Research Alliance, Wolcott, Conn., and Dallaire, who is president of Insurance Consulting & Analysis, LLC, Windsor, Conn., also reported that:

“For 9 months of 2008, The Townsend 100 Companies partially offset the $77 billion of net capital losses with $41 billion of new surplus paid-in and $15 billion of net operating gains, writes the president of Townsend Independent Actuarial Research Alliance, Wolcott, Conn.

“In the 3rd quarter alone, net capital losses were $48 billion, partially offset by $28 billion of new surplus paid-in and $3 billion of net operating gains. Expectations are that net capital losses in the 4th quarter will again exceed the sum of new surplus paid-in and net operating gains.

“Data produced by Insurance Consulting & Analysis, LLC, shows that 83 of the 100 largest U.S. life insurers had a decline in total surplus funds in the first 9 months of 2008, and 24 companies had a surplus decline exceeding 20% of their surplus at the beginning of 2008.
“Surplus funds for The Townsend 100 Companies fell 4.7% in the first half of 2008, and 6.8% in the third quarter. For 9 months, industry surplus fell 11.6%.

Read the entire article here