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Conning Sees Slow Industry Recovery

By Trevor Thomas

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The life-annuity industry will continue to struggle for a while to recover from the financial crisis of 2008 and the loss of assets and surplus, according to a new report.

Preliminary results show the life insurance industry had a statutory net loss of $51 billion in 2008 and that surplus plus asset valuation reserves at the end of the year fell 13% to $273 billion, said Terence Martin, analyst at Conning Research & Consulting, Hartford.

In its report, “Life-Annuity Forecast & Analysis: Midyear 2009,” Conning forecasts a recovery for the life-annuity industry but says it believes the industry will continue to suffer capital losses at least through 2009.

“While the industry will show a net statutory operating gain in 2009, it will be far below the robust levels of 2003 through 2007,” says Conning, a unit of Aquiline Capital Partners L.L.C., New York.

Conning forecasts that surplus plus AVR for the industry will increase 23% to $337 billion by 2011. It also forecasts premium growth through 2011 due to a demand for estate planning, a focus on savings and on more conservative protection needs.