-- Conservative Investment Strategies Avoid Potentially Higher-Yielding
Schedule BA Investment Classes
HARTFORD, Conn., Oct. 27 /PRNewswire/ -- Life insurers suffered a steep
decline in gross investment returns over the last five years, led by falling
interest rates as well as corporate defaults and rating agency downgrades in
the early years of the period, according to a new study by Conning Research &
Consulting, Inc.
Gross investment income returns for the period 2000 to 2004 dropped from
7.5% in 2000 to 5.9% in 2004. However, lower investment expenses somewhat
cushioned the blow, improving each year during the study period.
"As interest rates declined, insurers took a significant hit in overall
return," said George McKeon, analyst at Conning Research. "However, they
sensibly looked for less expensive investment classes and made the appropriate
shifts to help offset the decline in returns. Returns were boosted by locking
in capital gains, particularly in the bond portfolio where they added more
than 6% to the total investment income in 2004. One additional consequence
was a continuing decline in average bond maturity. Surprisingly, though, we
see very little usage of potentially higher-yielding Schedule BA investment
classes at a time when gross investment returns are under such pressure."
The Conning Research study, "Investment Profile of the Life Insurance
Industry-2005 Edition," examines statutory investment information over a
five-year period for the industry and compares investment returns and sector
strategies within each of the key investment classes.
"Our study looks at six distinct classes of insurers within the life
industry," said Stephan Christiansen, director of research at Conning
Research. "While we found differing utilization of investment approaches, all
experienced declining returns. In this environment, larger companies may
achieve some economies of scale in expenses relating to certain asset classes,
and they may develop competitive advantages in net investment yields."
"Investment Profile of the Life Insurance Industry-2005 Edition" is
available for purchase from Conning Research & Consulting, Inc., by calling
(888) 707-1177 or by visiting the company's Web site at
http://www.conningresearch.com
About Conning Research & Consulting, Inc.
The Conning name has represented excellence in independent insurance
industry research for more than 90 years. As a result of its wealth of
experience and intimate knowledge of the insurance industry, Conning
understands industry challenges and opportunities and can provide in-depth
insights and analyses. Conning provides both public and proprietary research
as well as consulting services to the financial services industry. Conning is
headquartered in Hartford, CT.
Anne Steinberg or Greg Jones
Kitchen Public Relations, LLC
212-687-8999
anne@kitchenpr.com or gjones@kitchenpr.com
SOURCE Conning Research & Consulting, Inc.
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Related links:
http://www.conningresearch.com
CONTACT:
Anne Steinberg or Greg Jones of Kitchen
Public Relations, LLC, +1-212-687-8999, anne@kitchenpr.com or
gjones@kitchenpr.com
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