Weiss Ratings


Life and Health Insurers' Profits Jump 437%
During First Nine Months of 2003
Industry Records $38 Billion Increase in Capital and Surplus

JUPITER, Fla., March 29, 2004 — Profits of the nation's life and health insurers jumped $14.8 billion, or 437 percent, to $18.1 billion in the first nine months of 2003, the best third-quarter increase in a decade, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

Driving the industry's steep profit growth, the change in reserves fell to $101.5 billion for the first three quarters of 2003, an $11.8 billion decline compared to the $113.3 billion change in reserves reported for the same period in 2002. The five life and health insurers responsible for nearly 90 percent of the changes in reserves were:

Company

Headquarters

Weiss Safety Rating

Increase (Decrease) in Aggregate Reserves ($Mil)

3rd Qtr 2003

3rd Qtr 2002

$ Change

Kemper Investors Life Ins. Co.

Schaumburg, Ill.

C+

(3,172.1)

219.9

(3,392.0)

General Electric Capital Assur. Co.

Richmond, Vir.

C+

1,214.5

4,314.7

(3,100.2)

Prudential Ins. Co. of America

Newark, N.J.

B-

319.7

2,176.2

(1,856.5)

Teachers Ins. & Annuity Assoc.

New York, N.Y.

A+

6,053.7

7,529.3

(1,475.5)

Transamerica Life Ins. Co.

Cedar Rapids, Iowa

B-

2,018.0

3,457.8

(1,439.9)

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

"The decrease in changes in reserves was caused by a combination of factors, including fewer new sales, more conservative guaranteed minimum benefits on new policies, and lower interest crediting on new policies," said Melissa Gannon, vice president of Weiss Ratings, Inc. "Time will tell if the rest of the industry will follow suit."

Also contributing to the industry's robust profits was a strong performance by the stock market, which improved insurers' investment portfolios. As a result, the industry reported only a $4.2 billion capital loss on the sale of investments during the first three quarters of 2003, compared to a $9.6 billion loss during the same period in 2002.

Industry Capital and Surplus Surges

With the equity market continuing its upward momentum, life and health insurers enjoyed a $10.1 billion unrealized capital gain on investments, which led to a 16.8 percent increase in capital and surplus, from $224.9 billion at September 30, 2002, to $262.8 billion at September 30, 2003. Life and health insurers reporting the largest increases in capital and surplus were:

Company

Headquarters

Weiss Safety Rating

Capital & Surplus ($Mil)

3rd Qtr 2003

3rd Qtr 2002

$ Change

Metropolitan Life Ins Co.

New York, N.Y.

B+

8,055.4

5,290.5

2,764.9

American General Life Ins Co.

Houston, Texas

B+

3,854.2

1,713.7

2,140.5

Sunamerica Life Ins Co.

Los Angeles, Calif.

B-

3,848.9

2,023.2

1,825.7

Teachers Ins. & Annuity Assoc.

New York, N.Y.

A+

9,889.8

8,431.1

1,458.8

AIG Annuity Ins. Co.

Amarillo, Texas

B

2,698.5

1,409.4

1,289.1

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

Notable Upgrades and Downgrades

Among the 924 insurers recently reviewed by Weiss, 16 companies were upgraded and 20 were downgraded. Notable upgrades include:

Notable downgrades include:

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.

Weiss issues safety ratings on more than 15,000 financial institutions, including insurance companies and banks. Weiss also rates the risk-adjusted performance of more than 12,000 mutual funds and more than 8,000 stocks. Weiss Ratings is the only major rating agency that receives no direct or indirect compensation from the companies it rates for issuing its ratings. Revenues are derived strictly from sales of its products to consumers, institutions, businesses, libraries, and governmental agencies.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $14.99 through www.WeissRatings.com, or starting at $19 by calling 800-289-9222.

# # #

Note to editors: National and state listings of strongest and weakest life and annuity insurers are available.


15430 Endeavour Drive, Jupiter, FL 33478 · (561) 627-3300 · www.weissratings.com