Are Insurers Credit Crunch's Next Victim?

Editor's note: Falling home prices and subsequent defaults on mortgage-backed securities led to a credit and liquidity crisis that's seized up financial markets since mid-2007, and it's only getting messier in 2008. This is the sixth installment in an occasional series about how the tumult in the credit markets will affect the economy and the markets throughout the year.

Earlier stories looked at mortgage lenders, banks, brokerages, ratings agencies and private equity.

Get ready for the latest chapter in the subprime saga: The hits in the insurance industry.

News earlier this month that insurance giant AIG(AIG Quote) had taken a charge of $5 billion related to mortgage credit derivatives catapulted the sector onto center stage. That was followed this week by a forecast from rating agency Fitch that the life insurance sector would take losses of up to $8 billion -- all related to home loans made to borrowers with sketchy credit histories. ...