Fitch Ratings expects 2010 earnings and capital trends for life insurance carriers in general to strengthen from 2009 levels.

Fitch, New York, says it anticipates the improvement mostly because life insurers are experiencing lower investment losses then they did last year.

Improved earnings and capital trends, persistent signs of an improving economy and confidence that losses on commercial real estate will be contained also lead Fitch to consider the possibility it may upgrade the industry’s outlook to stable from negative.

“However, Fitch still projects an increase in [commercial real estate]-related investment losses, which will likely be a significant driver of realized losses in 2010,” the rating service said in a statement.

Among key trends Fitch expects to see for the life insurance industry this year:

–Growth in the industry’s total adjusted capital, caused by improved net earnings, partly offset by the resumption of dividends paid to parent companies.

–An increase in aggregate risk-based capital ratios.

–Moderation in realized investment losses across all major asset classes, except commercial real estate.

–A rise in net investment income because of an increase in invested assets, a partial redistribution of increased cash balances into higher-yielding assets and better returns from alternative investments, partly counterbalanced by low interest rates.