Weiss Ratings


Life and Health Insurers' Profits Skyrocket 213%
in First Quarter 2004, Highest Increase in Decade
Industry Separate Accounts Increase $277 Billion; Junk Bond Holdings Decline 6%

JUPITER, Fla., September 22, 2004 — Profits of the nation's life and health insurers jumped $5.9 billion, or 212.5 percent, to $8.7 billion in the first three months of 2004, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. Industry profitability for the first quarter reached its highest level in 10 years primarily due to a $3.1 billion improvement in capital gains and a $1.5 billion increase in investment income.

Insurers reporting the largest year-over-year increases in earnings include:

Company Headquarters Weiss
Safety
Rating
Net Income (Loss) ($Mil)
1st Qtr
2004
1st Qtr
2003
$
Change
Pacific Life Insurance Company Newport Beach, Calif. A 523.0 99.0 424.0
Continental Assurance Company Chicago, Ill. C 303.1 (91.2) 394.3
Teachers Ins. & Annuity Asn. of Amer. New York, N.Y. A+ 247.2 (113.2) 360.5
Hartford Life & Accident Insurance Co. Simsbury, Conn. B+ 370.8 41.3 329.5
Prudential Insurance Co. of America Newark, N.J. B- 347.1 26.5 320.5

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

Industry Separate Accounts Increase $277 Billion

As a result of the improved equity markets, insurers reported a $276.8 billion, or 29.1 percent, increase in separate accounts, reflecting renewed interest in variable life and annuity products. The industry reported that separate accounts rose to $1.2 trillion in the first quarter of 2004, compared to $951 billion in the first quarter of 2003.

Life and health insurance companies reporting the largest increases in separate accounts include:

Company Headquarters Weiss
Safety
Rating
Separate Accounts ($Bil)
1st Qtr
2004
1st Qtr
2003
$
Change
Hartford Life & Annuity Insurance Co. Simsbury, Conn. B+ 55.4 35.7 19.7
Equitable Life Asr Society of the U.S. New York, N.Y. B- 57.7 39.8 17.8
Manufacturers Life Insurance Co. USA Bloomfield Hills, Mich. B+ 44.7 29.4 15.3
Hartford Life Insurance Company Simsbury, Conn. B+ 79.8 67.0 12.8
Nationwide Life Insurance Company Columbus, Ohio B+ 56.8 44.7 12.1

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

"The market rebound enabled assets in these accounts to regain and surpass their value from four years ago," said Melissa Gannon, vice president of Weiss Ratings, Inc. "In addition, consumers are becoming less fearful of the equity markets and are again considering variable life and variable annuity products."

Junk Bond Holdings Decline by 6%

The economic recovery was also responsible for improved ratings from junk to investment grade on many bonds. As a result, insurers' junk bond portfolios declined $8.8 billion, or six percent, from $146.6 billion in the first quarter of 2003 to $137.8 billion in the first quarter of 2004. This reduced the proportion of junk bonds to invested assets from 6.04 percent to 5.23 percent.

Life and health insurance companies reporting the largest reductions in junk bond holdings were:

Company Headquarters Weiss
Safety
Rating
Junk Bonds ($Mil)
1st Qtr
2004
1st Qtr
2003
$
Change
Prudential Insurance Co. of America Newark, N.J. B- 9,724.4 10,608.3 (883.9)
Teachers Ins. & Annuity Asn. of Amer. New York, N.Y. A+ 8,512.0 9,374.8 (862.8)
Principal Life Insurance Company Des Moines, Iowa A- 2,495.1 3,315.4 (820.3)
Jackson National Life Insurance Co. Lansing, Mich. C+ 2,373.3 2,966.0 (592.6)
Equitable Life Asr. Society of the U.S. New York, N.Y. B- 1,161.3 1,614.5 (453.1)

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

Notable Upgrades and Downgrades

Among the 886 insurers recently reviewed by Weiss, 38 companies were upgraded and 13 were downgraded. Notable upgrades include:

• American General Assurance Co. (Schaumberg, Ill.) from C+ to B-
• American Income Life Insurance Co. (Indianapolis, Ind.) from B+ to A-
• Globe Life & Accident Insurance Co. (Wilmington, Del.) from B+ to A-

Notable downgrades include:

• Advanta Life Insurance Co. (Phoenix, Ariz.) from C- to D+
• Mountain Life Insurance Co. (Alcoa, Tenn.) from C- to D+
• Scottish Re Life Corp. (Kansas City, Mo.) from C- to D+

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 Ratings, Inc. reviews more than 8,000 stocks daily, including all those traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq. Weiss also issues investment ratings on more than 12,000 mutual funds, covering equity, fixed-income, and closed-end funds, and provides financial safety ratings on more than 15,000 financial institutions, including banks and insurance companies. It 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. Ratings and analyses, consumer financial and investment guides, and other products are available for purchase through www.weissratings.com or by calling 800-289-9222.

 

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

 

 


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