Life Insurers’ Total Investment Return Falling

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“Mother’s Milk” of Insurance Industry Under Pressure, says Conning Research & Consulting

(New York, NY) – Even with their bond-heavy asset mix, life insurers’ total investment income was essentially flat from 1997 to 2001, according to a new study by Conning Research & Consulting, Inc.

The study, “Investment Profile of the Life Insurance Industry: 2002 Edition,” found that bonds continue to dominate life insurer investments, accounting for more than 80% of assets in all years. Despite this conservative allocation, the total rate of return on investment fell from 8.3% in 1997 to 7.6% in 2001.

“Investment income, which is the ‘mother’s milk’ of the insurance industry, is under pressure as new investments by the industry are at a much lower rate of return than the rates embedded in the industry’s portfolio,” said Michael Weinstein, Director of Research, Conning Research & Consulting.

Using a sample group of 434 companies, this annual strategic study examines life insurer investment practices and analyzes some of the results of the investment strategies that are currently in place. It also looks at how insurers have structured the asset side of their balance sheets and presents both current and historical allocations.

In addition to a review of current and historical investments by asset class, this edition features an increased focus on the investment income associated with each asset class, both in dollar amounts and as a percentage of the asset value of the underlying investments. Investment returns are presented at three levels: gross investment income, gross realized return, and total investment return.

The Conning study, “Investment Profile of the Life Insurance Industry: 2002 Edition” is available from Conning Research & Consulting, Inc. by calling (888) 707-1177 or by visiting the company’s Web site at

About Conning Research & Consulting

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 has offices in New York and Hartford.