Conning & Company Reports Life Insurers Missed Charge On Bull Market of Late 1990'S.Insurance & Business Editors HARTFORD, Conn.--(BUSINESS WIRE)--April 1, 2002 Conning & Company: - Conning & Company Study Finds Life Insurers Missed Opportunities to Grow Investment Portfolios Life insurers did not utilize common stock investments during the equity bull market of the 1990's and stayed on the sidelines On the sidelines An investor who decides not to invest due to market uncertainty. on the sidelines Of or relating to investors who, having assessed the market, have decided to avoid committing their funds. while the rest of the insurance world was running with the bulls. According a new study from Conning & Company, it appears that while other insurers were investing more of their assets in common stocks, life insurers were reducing their common stock portfolios. The Conning study "Investment Profile of the Life Insurance Industry: 2001 Edition," shows that life insurers finished 2000 with 1.7% of their investable assets allocated to common stock investments, excluding the common stock of affiliates. The percentage matches their position as of the end of 1996. Over this period, the value of common stock investments (as measured by the S&P 500) increased more than 4 times faster than life insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. assets. Holding the same percentage of assets could only be accomplished either by having fewer stock positions or smaller holdings within those positions. "Contrary to their property/casualty counterparts, life insurers played the market conservatively and in our opinion missed an opportunity," said George McKeon, Assistant Vice President at Conning & Company and author of the study. "In addition, because many life insurance products are sold based on investment earnings, many life insurers were forced to improve the competitiveness of their products by making riskier investments, such as in junk bonds junk bond, a bond that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. , to keep the yield up." During the 1996-2000 time period Conning saw very little change in split of asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. between fixed and equity investments. Among individual companies, Conning found that risk based capital (RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). ) ratios (a standard measure of capital adequacy) for life insurers varied widely, with many companies either way above or well below the accepted RBC ratio. By looking at the ratios calculated on a "group basis" using the aggregate ratio for all the companies in a common corporate structure, Conning found a significant pattern centered around the 250% to 275% range, which is accepted as the target many insurers have for their RBC ratio. "While regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. can inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. investment in common stock, had life insurers increased their common stock holdings, the value of their assets could have increased significantly and had a positive impact on net investment income," summed up McKeon. "Instead life insurers chose a more conservative investment strategy." "Investment Profile of the Life Insurance Industry: 2001 Edition" is an annual study issued by Conning. Enhancements over the earlier edition include a comparison of General Account versus Separate Account asset growth, the introduction of "investable assets" (a concept which excludes assets controlled by other than investment strategy from the analysis) and a larger universe of companies. The Conning study, "Investment Profile of the Life Insurance Industry: 2001 Edition" is available from Conning & Company for $950.00 by calling toll free (888) 707-1177 or (860) 520-1575. A complete listing of all Conning Strategic Studies can also be found by visiting the company's web site at www.conning.com . About Conning Conning is one of the largest asset managers specializing in insurance company investments in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , a leading source of private equity capital to financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. companies and a nationally respected provider of research publications on the insurance industry. Conning & Company is located at CityPlace II, 185 Asylum asylum (əsī`ləm), extension of hospitality and protection to a fugitive and the place where such protection is offered. The use of temples and churches for this purpose in ancient and medieval times was known as sanctuary. Street, Hartford, CT 06103. |
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