Conning Research: Life Industry Investments 2002-2006

Challenges Met; Challenges Ahead

Hartford, CT, January 22, 2008 – The life insurance industry was challenged during the five year period from 2002-2006 to achieve adequate returns on long-term bonds, which represented over 80 percent of investable assets, according to a new study by Conning Research & Consulting, Inc.

“In our analysis of the period from 2002-2006, we found that life insurers were challenged by an economic environment that featured a low but increasing target federal funds rate combined with flat or inverted yield curves. While this environment led to declines in book yields, the industry still managed to increase total returns over the period by 0.4 percent with capital gains and by selectively employing alternative investments,” said Greg Smith, analyst at Conning Research. “That result, combined with a strong capital position, left life insurers in decent shape to face the challenges of falling interest rates in 2007.”

The Conning Research study, Investment Profile of the Life Insurance Industry: 2007 Edition, analyzes life insurer investment strategies for 433 U.S. life/health insurers for the five-year period spanning 2002 through 2006.

“Competitive market pressures remained intense for life insurers during this period, as their ability to lower credited rates lagged investment yields,” said Stephan Christiansen, director of research at Conning. “However, by 2006 the balance between credited rates and investment yields returned to normal levels.”

Investment Profile of the Life Insurance Industry: 2007 Edition is available for purchase from Conning Research & Consulting, 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.