U.S. life insurers enjoyed double-digit growth in total capital and surplus last year, according to a new report.
Published by Moody’s Investors Services Inc., New York, the research shows that Moody’s rated companies reported a 13% growth in capital and surplus for the year ended 2009. Capital and surplus, including asset valuation reserves (AVR), rose to $237 billion from $210 billion.
Fueling the increases in capital and surplus, says Moody’s, were improvements in operating income to $41 billion form a loss of $9 billion in 2008. The “robust equity markets” markedly improved earnings in both group and annuity operations.
Offsetting the gains in operating earnings were large realized and unrealized losses in derivatives, the result of losses from hedging variable annuities. In 2009, net realized and unrealized losses totaled $36 billion, as compared to $56 billion in 2008, observes Moody’s.