Conning Research: Life Insurers’ Lackluster Gross Investment Returns Turn Up In 2005

Hartford, CT, January 11, 2006 – Although life insurers suffered a steep decline in gross investment returns over the last five years, there were signs of a recovery in 2005, according to a new study by Conning Research & Consulting, Inc. Overall, gross investment income returns on investable assets for the period 2001 to 2005 dropped from 7.10% in 2001 to 5.93% in 2004, before increasing to 6.02% in 2005. Accident & Health companies posted the most favorable average investment return over the period due to their heavy allocation to bonds, while Annuity companies reported the lowest return.

“A combination of economic conditions and Federal Reserve activity caused interest rates to decline, and insurers took a significant hit in overall return,” said George McKeon, analyst at Conning Research. “For the first time over the study period, returns increased, albeit slightly, in 2005, suggesting that the worst is behind us.”

The Conning Research study, “Investment Profile of the Life Insurance Industry — 2006 Edition,” examines statutory investment information over a five-year period for the industry and compares investment returns and sector strategies for peer groups within each of the key investment classes. New with this edition of the annual Conning study is a listing of holdings in each of the major asset classes for the 452 companies that comprise the study universe.

“Of course bonds dominate life insurer investments,” said Stephan Christiansen, director of research at Conning Research. “Accounting for more than 80% of the industry’s investable assets over the past five years. Bonds are one of only two (out of six) asset classes that grew both in amount and as a percent of total assets over the study period. Schedule BA is the other. And while investment strategies differed among the peer groups we analyzed, all peer groups held a larger proportion of long-term bonds in relation to their investable assets at the end of our review period than at the beginning.”

“Investment Profile of the Life Insurance Industry — 2006 Edition” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s web site at

About Conning Research & Consulting, Inc.

Conning provides insurance industry analysis to insurers and industry stakeholders. The Conning name has represented excellence in independent insurance industry research for 50 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth insights and analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT. .