Life Insurers Bump Reserves, Post Losses

U.S. life insurers reserve strengthening impacted losses in the second quarter, especially at many companies that sell fixed and variable annuities.
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NEW YORK (

TheStreet

) -- U.S. life insurers reserve strengthening siphoned capital and increased losses in the second quarter, especially at companies that sell fixed and variable annuities, according to a report by

SNL Financial.

SNL reported the reported an industry net loss of $900.3 million, down from a net income of $8.9 billion in second-quarter 2009."Primarily variable annuity writers were affected," said Wayne Dolton and Senior analyst at SNL Financial said over the phone. He added that the largest insueres to see an increase in reserves were

The Hartford

(HIG) - Get Report

, with an increase in $2.7 billion,

Prudential

(PRU) - Get Report

, with an increase in $964 million,

Jackson National Life

with an increase in $1.8 billion,

ING

(ING) - Get Report

with an increase in $1.5 billion and

Manulife

(MFC) - Get Report

with an increase of $1.8 billion

While the life insurance industry suffered a net loss, U.S. life companies reported vastly improved capital and surplus numbers of $294.1 billion, up 17% from last year. Insurers also reported that total revenue increased by 3% due to increased investment income. The study also found that an incremental increase in reserves caused quarterly net gains from operations to slide by 78%, to $6.2 billion. Reserves increased by $25.8 billion this year.

"Reserve strengthening significantly impacted performance in the second quarter, especially at many of the largest annuity writers, who reacted to market turmoil by increasing reserves on their guarantees," said Jon Wright, SNL's director of insurance in a statement.

The largest annuity writers according to

Life Insurance Marketing Research Association's (LIMRA)

were

Prudential

,

MetLife

(MET) - Get Report

,

TIAA-CREF

(TICRX) - Get Report

and

Jackson National Life

, which topped variable annuity sales.

New York Life

,

American International Group

(AIG) - Get Report

and Allianz Life of North America topped fixed annuity sales.

--Written by Maria Woehr in New York.

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