Are Insurers Credit Crunch's Next Victim?

Editor's note: The nagging credit crisis that has enveloped financial markets since the summer seemed to be catching up to insurers last week. American International Group on Thursday reported a $5.3 billion fourth-quarter loss due largely to $11.12 billion in charges tied to senior secured credit default swaps. On Friday, Swiss Reinsurance reported an 87% drop in fourth-quarter net profit thanks largely to a 1.3 billion Swiss franc charge on credit default swaps.

TheStreet.com highlighted the potential dangers the credit markets posed for insurers in the following Feb. 22 story, "Are Insurers Credit Crunch's Next Victim?," part of our occasional series, "Credit Crunch 2008." 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 in February 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 on Feb. 21 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. ...