Taking cover: like most investors, insurers had a tough time during the bear market and struggle to find good investments now.During the bull market, life was good for asset managers, including those running insurance-company portfolios. Since then, life has been tough as falling stock prices and bond defaults have hurt portfolios and falling bond yields have reduced income. Compared to other kinds of institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. , insurers have weathered the bear market better, mostly due to regulation and their need to choose assets appropriate to their liabilities. But that does not apply to all insurers. Some invested more aggressively and paid the price, especially major companies outside 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. . "Life insurers forgot the basics of asset-liability management during the bull period," said Toby Pittaway, a consultant in the insurance practice of Mercer mer·cer n. Chiefly British A dealer in textiles, especially silks. [Middle English, from Old French mercier, trader, from merz, merchandise, from Latin merx Oliver Ol·i·ver , Joseph Known as "King Oliver." 1885?-1938. American jazz musician and composer who had a great influence on the style of Louis Armstrong. His Creole Jazz Band was the first Black group to make jazz recordings. Wyman, the asset-management arm of Mercer Management Consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects , a part of Marsh McLennan McLennan, MacLennan or Maclennan is a Scottish surname. It may refer to: People
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , life insurers moved dramatically into
equities." Allocations to stocks there in 2000 ranged from 30% to
40%, with some United Kingdom companies going as high as 80%, he said.
In the United States, 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. allocations to stocks were held to around 20%, due to stricter regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. limits and capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , and many insurers here allocated even less. "Life insurers justified this move through a thinly disguised dis·guise tr.v. dis·guised, dis·guis·ing, dis·guis·es 1. a. To modify the manner or appearance of in order to prevent recognition. b. To furnish with a disguise. 2. veil that equity was of longer duration than fixed income and was therefore an appropriate match for long-duration liabilities," said Pittaway. "The equity slump Slump A temporary fall in performance, often describing consistently falling security prices for several weeks or months. of 2000 to 2002 quickly removed this veil." During the past 2 1/2 years, a number of U.S. insurers have been reducing their exposure to equities to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. market volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the and to protect their risk-based capital as a means of "damage control," said John Scheid For Scheid in Germany, see Scheid, Germany. Scheid is a municipality in the district of Hinterrhein in the Swiss canton of Graubünden. , chairman of the Americas A·mer·i·cas , the See America. Insurance Group at PricewaterhouseCoopers LLP LLP - Lower Layer Protocol , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . If risk-based capital drops below certain levels, companies must take charges--move assets into reserves--to make up for portfolio impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . Both the National Association of Insurance Commissioners The National Association of Insurance Commissioners (NAIC) is an Internal Revenue Code Section 501(c)(3) non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. (for statutory accounting) and the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (for generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) have specific rules lot other than temporary impairments, he said. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. insurers were hard hit by the bear market, especially companies based in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and the United Kingdom, said Scheid. "Some of them sold low, and some have held on, hoping for an improvement in the market," he said. "They are working with regulators on minimum capital requirements." U.S.-based insurers, with their conservative portfolios, have generally weathered the difficult markets better than other institutional investors, such as mutual funds, large pension funds and foundations. "Insurers I work with, like Northwestern north·west n. 1. Abbr. NW The direction or point on the mariner's compass halfway between due north and due west, or 45° west of due north. 2. An area or region lying in the northwest. 3. Mutual Life, have performed better than the general market because they are diversified diversified (di·verˑ·s investors," said Scheid. "They are not more heavily weighted in any sector of the market, but are invested across all industry sectors in equities, bonds, real estate and mortgage loans." Pittaway estimates that insurer equity exposures ha many cases have been brought down to less than hall of their 2000 levels. In some cases, the exposure has fallen to less than 10% of total assets, either through the shifting of equities into fixed income, or through the use of equity derivatives In finance, an equity derivative is a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. Market participants trade equity derivatives in order to transfer or transform certain risks associated with the to hedge the risk. "Management has been painfully brought around to accept that their business is inherently a 'boring one,' and the basics of risk-matching assets against liabilities are being re-learnt," he said. More than a handful of insurers have moved to near zero-market risk in their core assets, leaving equity and other risky exposures for their surplus capital only, he added. The previous three years might be viewed, in fact, as a reversion reversion: see atavism. to the mean after a startling star·tle v. star·tled, star·tling, star·tles v.tr. 1. To cause to make a quick involuntary movement or start. 2. To alarm, frighten, or surprise suddenly. See Synonyms at frighten. run of investment good fortune. For nearly two decades, insurers enjoyed some stellar returns on their stock portfolios and good yield spreads on their bond portfolios. "It was one of the greatest spread rallies ever from the late 1980s to the late 1990s," said Randall Randall may refer to the following: In places:
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. and Management Co., a manager of high-quality fixed-income and convertible bond portfolios for insurers. "It was a perfect environment for insurers." Zeller said that this period saw a "heavy emphasis and increased appetite increased appetite Hyperphagia, polyphagia " for corporate bonds, and that insurers managed them more aggressively and actively. "On the property/casualty side, there was an aggressive harvesting har·vest n. 1. The act or process of gathering a crop. 2. a. The crop that ripens or is gathered in a season. b. The amount or measure of the crop gathered in a season. c. of capitol gains Capitol Gains was a program focusing on political issues in Washington as they impact the economy, the business community and financial markets, aired weekdays from 8 to 8:30 AM ET on CNBC. Hosted by Peter Barnes. over time years," he said. Since June June: see month. , interest rates have surged back up. "That has created a kind of conundrum conundrum A problem with no satisfactory solution; a dilemma ," he said. "The higher rates are good, but the lower carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. create a strain on surplus." On the life side, Zeller said, insurers demonstrated during the long period of strong investment results more interest in alternative products and employed absolute total-return strategies, especially the larger insurers. These strategies were more like those of other institutional investors, he said. Zeller said his company, which works with small to intermediate-sized companies, was focused more on book yields. With rates on the upswing Upswing An upward turn in a security's price after a period of falling prices. , it has turned to bonds with shorter durations. As of August, client companies were showing some appetite ap·pe·tite n. An instinctive physical desire, as for food or sex. Appetite The natural instinctive desire for food. for structured products, which can include collateralized mortgage obligations Collateralized mortgage obligation (CMO) A security backed by a pool of pass-through rates , structured so that there are several classes of bondholders with varying maturities, called tranches. and asset-backed securities Asset-backed security A security that is collateralized by loans, leases, receivables, or installment contracts on personal property, not real estate. asset-backed security A debt security collateralized by specific assets. . Zeller's company provides sub-advisory asset management and achieved good success over the past five years through convertible bonds, which typically made up a portion of client portfolios. Some 80% of its clients have used the convertible bond strategy, he said. Investors may convert these bonds into stock of the issuing company at their discretion under company-defined terms. Convertibles carry lower yields than regular bonds, but they can increase in value when a company's stock performs well, and Zeller said they offer "an excellent proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. " for direct investments in equities. Convertibles tend to be lower-rated securities, and some may more likely become impaired See assistive technology. , so insurers must be careful, he said. But those risks can be offset by superior returns. Zeller said his company was able over the past five years to exceed returns of stock indexes with less volatility. From March 2000 to March 2003, Asset Allocation and Management's convertible-bond performance was plus 25% compared with minus 17% for the Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. Investment Grade Convertible Index, minus 41% for the Standard & Poor's 500 Index, and minus 71% for the NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on . Corporate bonds currently take up about 30% of client portfolios, and collateralized mortgage obligations make up as much as 35%, said Zeller. The company has a very low commitment to treasuries and agency securities because of low book yields, but taxable municipal bonds Taxable municipal bond Taxed private-purpose bonds issued by the state or local government to finance prohibited projects such as sports stadiums. taxable municipal bond and tax-exempt tax-ex·empt adj. 1. Not subject to taxation, as the capital or income of a philanthropic organization. 2. Producing interest that is exempt from income tax: tax-exempt bonds. n. municipals remain attractive because of their relatively high yields, he said. Zeller's company uses convertible securities as a function of an insurer's ability to accept risk. "If it can, we recommend that it maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. its risk tolerance Risk Tolerance The degree of uncertainty that an investor can handle in regards to a negative change in the value of their portfolio. Notes: An investor's risk tolerance varies according to age, income requirements, financial goals, etc. for that asset class at 25% to 50% for some property/casualty companies, and lower than that for life companies," he said. Asset Allocation and Management is not involved in real estate or real estate investment trusts, but it does buy real estate notes, Zeller said. Notes are a fixed-income alternative backed by the properties. Duration's Importance The key driver in how insurers invest is the duration of their liabilities, said Scheid. U.S. life insurers, with their long-tailed Long-tailed may refer to: Ichthyology
1. Reported on the balance sheet, it's the value of a company's property, equipment and other capital assets, less depreciation. 2. A stock, bond or other asset that you plan on holding in your portfolio for a lengthy period of time. , which is why they often ladder ladder walking under one can bring only misfortune. [Western Folklore: Leach, 598] See : Luck, Bad ladder stood upon by Joseph to remove nails holding Christ to the cross. a series of bonds so their maturity dates are staggered and add equities, he said. Property/casualty personal lines, as well as some general liability, have short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. liabilities. Insurers faced particularly difficult investment decisions early this summer, when interest rates hit 45-year lows. Scheid said they continued to ladder bonds, but bought real estate investment trusts and mortgage loans to obtain slightly higher yields. They also looked into more private-placement securities, he said. Insurers also have a long history of outright ownership of real estate. "There is a whole host of insurers that have been real-estate investors for 50 years or more, and they have made an excellent return," he said. Some insurers became over weighted in commercial real estate holdings and had to sell them in the 1990s, Scheid said, but companies that operated a balanced portfolio--and stayed with their positions over a long time--fared well. Many of the over-weighted insurers invested heavily in office complexes and towers that didn't did·n't Contraction of did not. didn't did not didn't do perform very well, he said. Alternative investments such as hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" also became part of insurers' portfolios during the 1990s, but Scheid said the fall of Long Term Capital, a large hedge fund, and the poor performances of others have caused insurers to lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. their weighting and level of investment. Zeller said trying alternative products today "is like shooting where the rabbit rabbit, name for herbivorous mammals of the family Leporidae, which also includes the hare and the pika. Rabbits and hares have large front teeth, short tails, and large hind legs and feet adapted for running or jumping. was." "Markets are more volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. , and it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have a more difficult environment," he said. It can be difficult to match assets to liabilities. The strategy doesn't does·n't Contraction of does not. always work out, and bad things can happen in tough markets. When they do, insurers may be forced into actions they don't don't 1. Contraction of do not. 2. Nonstandard Contraction of does not. n. A statement of what should not be done: a list of the dos and don'ts. want to take. When Things Go Wrong In 2002, bond issuers defaulted at a much higher than average rate, said Atlanta-based John Fenton John Fenton (born December, 1954 in Midleton, County Cork) is a retired Irish sportsman. He played hurling with his local club Midleton and with the Cork senior inter-county team from 1975 until 1987. Fenton is regarded as one of Cork's greatest-ever players. , a principal of consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a Tillinghast-Towers Perrin General Perrin may refer to:
For many, the sales led to unwanted consequences. The sales could have generated realized capital losses, in which case regulators would require cash infusions into risk-based capital. Fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. writers typically hold an extra $6 in their capital and surplus for every $100 of annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. reserves, said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. O'Connor O'Con·nor , Flannery 1925-1964. American writer whose novels Wise Blood (1952) and The Violent Bear It Away (1960) and short stories, collected in such works as A Good Man Is Hard to Find , a consulting actually in the Minneapolis Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. office of Tillinghast-Towers Perrin. That amount might fail to about $4, and regulators would require they bring the risk-based capital level back to where it had been. Rating agencies also look at those levels, he said. Some companies might not have the assets and might instead choose to issue common or preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. or debt, O'Connor said. If an insurer is a subsidiary of a holding company, the holding company might issue the debt and put the money into the life company's risk-based capital. When the conditions were good for fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. , writers could expect to earn a 200-basis-point spread between portfolio earnings and interest rates paid to policyholders, Fenton Placenames Fenton is the name of the following places: England
adj. 1. Characterized by or constituting irony. 2. Given to the use of irony. See Synonyms at sarcastic. 3. , companies that actively managed their bond portfolios and bought below-investment-grade bonds might have been less susceptible susceptible /sus·cep·ti·ble/ (su-sep´ti-b'l) 1. readily affected or acted upon. 2. lacking immunity or resistance and thus at risk of infection. sus·cep·ti·ble adj. to credit ratings going down since they were already low, O'Connor said. The consequences of realizing capital gains and losses also might be slightly different for companies, depending on whether they report under statutory or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). accounting. O'Connor said that trader GAAE GAAE Graphic Arts Association Executives GAAE Ghazi Awad Architects & Engineers (Abu Dhabi, UAE) , gains and losses are reported immediately and affect net income. Under statutory accounting, gains or losses can be "smoothed out" over time. But O'Connor added that a company cannot smooth out its losses unless it has carried over gains from the past in an interest maintenance reserve. Tillinghast Tillinghast is the world's largest actuarial practice focused on insurance[1] and a unit of Towers Perrin specializing in risk management and actuarial consulting. recently conducted a proprietary survey on the investment strategy of 11 client companies writing fixed annuities. Fenton said it found that about half of the assets were in corporate bonds, with 10% of that amount in those below investment grade. About 5% was in asset-backed securities. Of the remaining 45%, about a third was in private placements, a third in commercial mortgages, and a third in mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. or collateralized mortgage obligations. Larger companies tended to be more involved in private placements because such unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. investments require more due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , and larger companies have more expertise, said Fenton. Private placements yield about 30 to 50 more basis points of yield, but their liquidity is not as good, he added. Commercial mortgages also provide more yield, but carry a prepayment risk Prepayment Risk The uncertainty related to unscheduled prepayment in excess of scheduled principal repayment. Notes: This risk is generally associated with mortgage securities. , which reduces the principal invested, he said. At the end of 2002, insurers could have invested in lower-rated bonds and earned yields 150 to 225 basis points over treasuries, whereas investment-grade investment-grade Of, relating to, or being a bond suitable for purchase by institutions under the prudent man rule. Investment-grade is restricted to those bonds graded BBB and above by Standard & Poor's and graded Baa3 and above by Moody's. corporate bonds would earn haft that amount over treasuries, Fenton said. "So insurers were very tempted to invest in those, but the issue has been what provision they could make for defaults," he said. A current school of thought is that insurers should be required to adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. market-consistent valuations. If adopted, insurers "probably wouldn't would·n't Contraction of would not. wouldn't would not wouldn't would get as much juice" by investing in riskier assets, Fenton said. "There's a potential that fair-value accounting will require market-consistent valuations." O'Connor said the International Accounting Standards Board  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and , the international version of the Financial Accounting Standards Board, is considering it, but he said, "It's not straightforward how to do that for annuities and life insurance. What the IASB IASB See International Accounting Standards Board (IASB). comes up with might be something different." Insurance Mixology mix·ol·o·gy n. The study or skill of preparing mixed drinks. mix·ol  o·gist n. : Matching Assets to LiabilitiesInsurers and their investment managers may have to overhaul the way they manage their portfolios to more accurately offset liabilities, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Toby Pittaway, a consultant in the insurance practice of Mercer Oliver Wyman, the asset-management arm of Mercer Management. Mercer Management is part of Marsh McLennan Cos. Inc. "To date, they have been used to divide up assets into simple benchmarks--more often than not only loosely related to the liability side--and then trying to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. these benchmarks by a few basis points," he said. "But an effective and true asset-liability approach requires an advanced skills base that few have--an ability to accurately measure liabilities on the risk side and translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. this into a detailed asset strategy that controls risk within carefully defined parameters," Pittaway said. This kind of precision was never required as long as equities provided double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. gains. But Pittaway predicts that with a likely prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. period of single-digit returns and limited capital reserves, asset-liability management may well define industry winners and losers over the coming years. As a result of these needs, the asset-management industry may discover new opportunities. Only 8% of U.S. insurance assets and 3% of European insurance assets are currently outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, , but the rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. of having asset management in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. is being "seriously reviewed," said Pittaway. "Building a third-party business on top of a supposedly already 'sunk' cost base is hardly an attractive revenue growth prospect in today's market, and many insurance executives would like to get out of time businesses they built up during the boom period. "The institutional asset-management sector, however, is still offering a service stuck in the previous decade, he added. "Life insurers are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. firms that can help them with their asset and liability issues, for managers that can help them manage an asset portfolio within defined risk guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. against a moving liability picture," Pittaway said. "To the next-generation asset managers ... the potential pickings are rich." Small insurers tend to outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER asset management more than large insurers, and life insurers more than property/casualty, Pittaway said. Large insurers are more likely to use alternative investments such as hedge funds, advanced real-estate investments and private placements, and those are what they tend to outsource. Property/casualty insurers, with shorter-term risks, need liquid, plain-vanilla plain-vanilla Of or relating to the uncomplicated version of a particular type of security. For example, a plain-vanilla derivative is typically exchange-traded and void of bells and whistles. investments that are easier to manage in-house. Life insurers invest in a wider range of instruments that require more skills to manage, he said. Pittaway said life insurers have liabilities that typically last 10 to 15 years, a length of time that doesn't match well against benchmarks. "That's where investing gets complicated," he said. Whether outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. would cause insurers to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. an extra layer of expenses "is very much a scale-driven question," Pittaway said. "It's true that you're you're Contraction of you are. you're you are you're be paying for someone else's profit margin," but if the outsourcing manager can provide the service--through scale or expertise--at a cost lower than time insurer's, then it can charge a premium, he said. MassMutual Credits Its Discipline of Value Investing Value Investing The strategy of selecting stocks that trade for less than their intrinsic value. Value investors actively seek stocks of companies with sound financial statements that they believe the market has undervalued. While many insurers have struggled with investing their assets in the past two to three years, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. Mutual Life Insurance Co. has
fared well."We have done much better than just weathering this environment," said Stuart Reese REESE Research and Evaluation on Education in Science and Engineering (National Science Foundation) , executive vice president and chief investment officer. "We've we've Contraction of we have. we've have done extremely well. We're we're Contraction of we are. we're we are very comfortable with the fact we significantly improved our competitive position vs. our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ." The good results were primarily because MassMutual stuck to its discipline of value investing. Reese said he would be surprised if MassMutual were not the most diversified major insurance company. "We focused on long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. returns and were not willing to sacrifice sacrifice [Lat. sacrificare=to make holy], a type of religious offering, or gift to a superior or supreme being, in which the offering is consecrated through its destruction. them for short-term income," he said. "We won't won't Contraction of will not. won't will not won't will jump in to invest in securities if we're not getting fairly compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for risk, even though that may entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary some short-term income sacrifice." MassMutual, one of a declining number of insurers to maintain A.M. Best Co.'s highest rating, A++ (Superior), makes use of the expertise of several subsidiaries to manage its general hind hind 1. emanating from or pertaining to hindlimb. 2. adult female deer, especially red and other large species. blue hind a hind which has not borne young. and surplus. Those subsidiaries include Oppenheimer Op·pen·hei·mer , J(ulius) Robert 1902-1967. American physicist who directed the Los Alamos, New Mexico, laboratory during the development of the first atomic bomb (1942-1945). Noun 1. Funds, which manages 65 mutual funds; Cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to Real Estate Advisers, which manages real estate; David L. Babson & Co., an individual and institutional money manager; and Antares Antares (ăntâr`ēz), brightest star in the constellation Scorpius; Bayer designation Alpha Scorpii; 1992 position R.A. 16h27.6m, Dec. −26°22'. Capital Corp., a commercial finance company which invests in middle-market The term middle-market may refer to either a type of newspaper or a type of company. A middle-market newspaper is one that attempts to cater to readers who want some entertainment value from their newspaper as well as adequate serious coverage of significant news and high-yield Adj. 1. high-yield - yielding a large amount of agricultural or industrial production fruitful - productive or conducive to producing in abundance; "be fruitful and multiply" commercial and industrial loans. MassMutual purchased Tremont Tremont is the name of several places:
1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. investment capabilities, including its hedge fund product. The company maintains strong liquidity by virtue of about $27 billion in investment-grade bonds Investment-grade bonds A bond that is assigned a rating in the top four categories by commercial credit rating companies. S&P classifies investment-grade bonds as BBB or higher, and Moody's classifies investment grade bonds as BAA or higher. Related: High-yield bond. , cash and short-term securities, according to an A.M. Best Co. report. Reese estimated MassMutual's outright ownership of real estate represents about 3.5% to 4% of its overall portfolio, which he said is among the higher percentages among major insurers. The holdings are primarily office buildings, hotels, warehouses and apartments. He described the company as "a regular participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. " in private placements and said they represent about 10% to 15% of the overall portfolio. Some 41% of the company's long-term bond investments are privately placed securities, with the majority of its non-investment-grade securities in this portfolio, according to the A.M. Best report. Among other alternatives to low-yielding bonds are subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". with warrants, a small amount in "the straight structured market," and a modest amount "in our own hedge fired," which is run primarily by the David L. Babson subsidiary. The company also engages in derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , but entirely for the purposes of hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. , not for speculation speculation, practice of engaging in business in order to make quick profits from fluctuations in prices, as opposed to the practice of investing in a productive enterprise in order to share in its earnings. , Reese said. Overall, MassMutual's "relatively stable insurance liabilities" allow it to accept more credit risk and a lower liquidity in its bond investments in exchange for enhanced yield opportunities, according to the A.M. Best report. The company has its own internal credit rating system for both public and private bonds, and it holds quarterly meetings to review all lower-quality investments, the report said. Reese said 2001 and 2002 were "probably the most difficult credit markets" he could remember, "but our level of difficulty was low relative to others'." As this year has progressed, new kinds of difficulties have emerged. "It's increasingly difficult to get paid for raking raking of an elephant—see back raking. risk, and it's harder to find investments with which we are comfortable," he said.
Asset Distribution, Top Property/Casualty Writers--2002
Rank is based on total admitted assets for 2002.
($ Millions)
Nonaffiliated % of
Rank Group Name AMB# Bonds Assets
1 State Farm Group 00088 $37,568 44.6
2 Berkshire Hathaway Ins Group 00811 22,002 27.9
3 Amer Intl Group Inc 18540 25,646 43.0
4 Travelers Prop Cas Group 18358 28,224 65.1
5 Allstate Ins Group 00008 26,711 65.4
6 Zurich/Farmers Group 18549 21,090 62.6
7 Liberty Mutual Ins Cos 00060 18,212 57.2
8 CNA Ins Cos 18313 16,852 54.6
9 Nationwide Group 05987 12,021 44.8
10 Hartford Ins Group 00048 16,508 64.0
11 St Paul Cos 00080 14,247 64.1
12 GE Global Ins Group 18572 11,478 52.4
13 Chubb Group of Ins Cos 00012 14,354 65.9
14 USAA Group 04080 5,148 33.4
15 Allianz of America Inc 18429 8,480 57.6
16 Munich Reins Group 04236 9,697 66.2
17 Progressive Ins Group 00780 6,751 51.5
18 State Comp Ins Fund of Calif 04028 8,881 76.4
19 Swiss Reins Group 03262 7,559 67.0
20 White Mountains Ins Group 18490 6,160 58.4
21 Ace INA Group 18498 4,896 48.1
22 Safeco Ins Cos 00078 6,871 69.6
23 Fairfax Finl (US) Group 03116 5,259 53.8
24 Royal & SunAlliance USA 18371 5,225 55.4
25 MBIA Grow 03166 7,544 81.9
Total Top 25 P/C Writers $347,384 52.5
Total U.S. P/C Stock $373,623 55.2
Total U.S. P/C Mutual $140,728 52.3
Total U.S. P/C Lloyds $127 37.0
Total U.S. P/C Reciprocal $38,083 52.2
Total U.S. P/C State Fund $16,870 73.1
Total U.S. P/C Agency $290,296 56.0
Total U.S. P/C Direct $277,033 53.3
Total U.S. P/C Other $2,101 57.2
Total U.S. P/C Industry $569,430 54.6
Nonaffiliated
Common % of
Rank Group Name Stocks Assets
1 State Farm Group $27,775 32.9
2 Berkshire Hathaway Ins Group 22,942 29.1
3 Amer Intl Group Inc 2,095 3.5
4 Travelers Prop Cas Group 98 0.2
5 Allstate Ins Group 2,750 6.7
6 Zurich/Farmers Group 1,365 4.1
7 Liberty Mutual Ins Cos 1,258 4.0
8 CNA Ins Cos 472 1.5
9 Nationwide Group 2,890 10.8
10 Hartford Ins Group 273 1.1
11 St Paul Cos 567 2.6
12 GE Global Ins Group 120 0.5
13 Chubb Group of Ins Cos 368 1.7
14 USAA Group 110 0.7
15 Allianz of America Inc 1,694 11.5
16 Munich Reins Group 929 6.3
17 Progressive Ins Group 1,001 7.6
18 State Comp Ins Fund of Calif 838 7.2
19 Swiss Reins Group 541 4.8
20 White Mountains Ins Group 279 2.6
21 Ace INA Group 113 1.1
22 Safeco Ins Cos 833 8.4
23 Fairfax Finl (US) Group 359 3.7
24 Royal & SunAlliance USA 332 3.5
25 MBIA Grow 44 0.5
Total Top 25 P/C Writers $70,047 10.6
Total U.S. P/C Stock $48,403 7.2
Total U.S. P/C Mutual $45,036 16.7
Total U.S. P/C Lloyds $9 2.6
Total U.S. P/C Reciprocal $5,866 8.0
Total U.S. P/C State Fund $2,049 8.9
Total U.S. P/C Agency $27,939 5.4
Total U.S. P/C Direct $73,326 14.1
Total U.S. P/C Other $98 2.7
Total U.S. P/C Industry $101,363 9.7
Nonaffiliated
Preferred % of
Rank Group Name Stocks Assets
1 State Farm Group $20 0.0
2 Berkshire Hathaway Ins Group 1,021 1.3
3 Amer Intl Group Inc 975 1.6
4 Travelers Prop Cas Group 1,049 2.4
5 Allstate Ins Group 291 0.7
6 Zurich/Farmers Group 81 0.2
7 Liberty Mutual Ins Cos 137 0.4
8 CNA Ins Cos 217 0.7
9 Nationwide Group 115 0.4
10 Hartford Ins Group 214 0.8
11 St Paul Cos 14 0.1
12 GE Global Ins Group 55 0.3
13 Chubb Group of Ins Cos 79 0.4
14 USAA Group 0 0.0
15 Allianz of America Inc 22 0.1
16 Munich Reins Group 74 0.5
17 Progressive Ins Group 141 1.1
18 State Comp Ins Fund of Calif 0 0.0
19 Swiss Reins Group 0 0.0
20 White Mountains Ins Group 195 1.9
21 Ace INA Group 11 0.1
22 Safeco Ins Cos 204 2.1
23 Fairfax Finl (US) Group 23 0.2
24 Royal & SunAlliance USA 130 1.4
25 MBIA Grow 21 0.2
Total Top 25 P/C Writers $5,088 0.8
Total U.S. P/C Stock $7,785 1.2
Total U.S. P/C Mutual $1,045 0.4
Total U.S. P/C Lloyds $0 0.1
Total U.S. P/C Reciprocal $701 1.0
Total U.S. P/C State Fund $42 0.2
Total U.S. P/C Agency $6,374 1.2
Total U.S. P/C Direct $3,168 0.6
Total U.S. P/C Other $31 0.8
Total U.S. P/C Industry $9,573 0.9
Affiliated
Bonds & % of
Rank Group Name Stocks Assets
1 State Farm Group $4,678 5.5
2 Berkshire Hathaway Ins Group 1,608 2.0
3 Amer Intl Group Inc 5,801 9.7
4 Travelers Prop Cas Group 793 1.8
5 Allstate Ins Group 3,376 8.3
6 Zurich/Farmers Group 444 1.3
7 Liberty Mutual Ins Cos 1,954 6.1
8 CNA Ins Cos 1,977 6.4
9 Nationwide Group 2,875 10.7
10 Hartford Ins Group 2,393 9.3
11 St Paul Cos 669 3.0
12 GE Global Ins Group 3,472 15.9
13 Chubb Group of Ins Cos 1,088 5.0
14 USAA Group 2,008 13.0
15 Allianz of America Inc 1,605 10.9
16 Munich Reins Group 2 0.0
17 Progressive Ins Group 375 2.9
18 State Comp Ins Fund of Calif 0 0.0
19 Swiss Reins Group 2 0.0
20 White Mountains Ins Group 293 2.8
21 Ace INA Group 90 0.9
22 Safeco Ins Cos 25 0.3
23 Fairfax Finl (US) Group 339 3.5
24 Royal & SunAlliance USA 37 0.4
25 MBIA Grow 50 0.5
Total Top 25 P/C Writers $35,955 5.4
Total U.S. P/C Stock $28,708 4.2
Total U.S. P/C Mutual $13,381 5.0
Total U.S. P/C Lloyds $3 0.8
Total U.S. P/C Reciprocal $2,632 3.6
Total U.S. P/C State Fund $7 0.0
Total U.S. P/C Agency $20,259 3.9
Total U.S. P/C Direct $24,463 4.7
Total U.S. P/C Other $9 0.2
Total U.S. P/C Industry $44,731 4.3
Mortgages
& Invested % of
Rank Group Name Real Estate Assets
1 State Farm Group $103 0.1
2 Berkshire Hathaway Ins Group 1 0.0
3 Amer Intl Group Inc 27 0.0
4 Travelers Prop Cas Group 271 0.6
5 Allstate Ins Group 76 0.2
6 Zurich/Farmers Group 47 0.1
7 Liberty Mutual Ins Cos 11 0.0
8 CNA Ins Cos 25 0.1
9 Nationwide Group 640 2.4
10 Hartford Ins Group 129 0.5
11 St Paul Cos 663 3.0
12 GE Global Ins Group 18 0.1
13 Chubb Group of Ins Cos 0 0.0
14 USAA Group 23 0.1
15 Allianz of America Inc 5 0.0
16 Munich Reins Group 0 0.0
17 Progressive Ins Group 2 0.0
18 State Comp Ins Fund of Calif 0 0.0
19 Swiss Reins Group 6 0.1
20 White Mountains Ins Group 0 0.0
21 Ace INA Group 0 0.0
22 Safeco Ins Cos 21 0.2
23 Fairfax Finl (US) Group 0 0.0
24 Royal & SunAlliance USA 146 1.5
25 MBIA Grow 0 0.0
Total Top 25 P/C Writers $2,215 0.3
Total U.S. P/C Stock $2,124 0.3
Total U.S. P/C Mutual $1,093 0.4
Total U.S. P/C Lloyds $19 5.7
Total U.S. P/C Reciprocal $94 0.1
Total U.S. P/C State Fund $202 0.9
Total U.S. P/C Agency $2,018 0.4
Total U.S. P/C Direct $1,502 0.3
Total U.S. P/C Other $12 0.3
Total U.S. P/C Industry $3,533 0.3
Cash &
Short-Term % of
Rank Group Name Investments Assets
1 State Farm Group $1,421 1.7
2 Berkshire Hathaway Ins Group 7,976 10.1
3 Amer Intl Group Inc 726 1.2
4 Travelers Prop Cas Group 4,153 9.6
5 Allstate Ins Group 397 1.0
6 Zurich/Farmers Group 837 2.5
7 Liberty Mutual Ins Cos 1,918 6.0
8 CNA Ins Cos 4,530 14.7
9 Nationwide Group 347 1.3
10 Hartford Ins Group 896 3.5
11 St Paul Cos 1,102 5.0
12 GE Global Ins Group 3,084 14.1
13 Chubb Group of Ins Cos 1,182 5.4
14 USAA Group 2,633 17.1
15 Allianz of America Inc 141 1.0
16 Munich Reins Group 728 5.0
17 Progressive Ins Group 557 4.2
18 State Comp Ins Fund of Calif 1,110 9.6
19 Swiss Reins Group 836 7.4
20 White Mountains Ins Group 1,498 14.2
21 Ace INA Group 509 5.0
22 Safeco Ins Cos 159 1.6
23 Fairfax Finl (US) Group 1,361 13.9
24 Royal & SunAlliance USA 1,042 11.0
25 MBIA Grow 877 9.5
Total Top 25 P/C Writers $40,019 6.0
Total U.S. P/C Stock $52,325 7.7
Total U.S. P/C Mutual $13,099 4.9
Total U.S. P/C Lloyds $102 29.8
Total U.S. P/C Reciprocal $4,768 6.5
Total U.S. P/C State Fund $2,170 9.4
Total U.S. P/C Agency $41,401 8.0
Total U.S. P/C Direct $29,997 5.8
Total U.S. P/C Other $1,066 29.0
Total U.S. P/C Industry $72,464 7.0
Other
Invested % of
Rank Group Name Assets Assets
1 State Farm Group $3,106 3.7
2 Berkshire Hathaway Ins Group 15,455 19.6
3 Amer Intl Group Inc 4,854 8.1
4 Travelers Prop Cas Group 2,305 5.3
5 Allstate Ins Group 1,362 3.3
6 Zurich/Farmers Group 1,042 3.1
7 Liberty Mutual Ins Cos 1,135 3.6
8 CNA Ins Cos 2,111 6.8
9 Nationwide Group 1,636 6.1
10 Hartford Ins Group 904 3.5
11 St Paul Cos 1,347 6.1
12 GE Global Ins Group 319 1.5
13 Chubb Group of Ins Cos 856 3.9
14 USAA Group 3,522 22.9
15 Allianz of America Inc 334 2.3
16 Munich Reins Group 513 3.5
17 Progressive Ins Group 425 3.2
18 State Comp Ins Fund of Calif 296 2.5
19 Swiss Reins Group 92 0.8
20 White Mountains Ins Group 450 4.3
21 Ace INA Group 120 1.2
22 Safeco Ins Cos 201 2.0
23 Fairfax Finl (US) Group 517 5.3
24 Royal & SunAlliance USA 161 1.7
25 MBIA Grow 596 6.5
Total Top 25 P/C Writers $43,659 6.6
Total U.S. P/C Stock $38,550 5.7
Total U.S. P/C Mutual $10,236 3.8
Total U.S. P/C Lloyds $10 2.8
Total U.S. P/C Reciprocal $6,035 8.3
Total U.S. P/C State Fund $571 2.5
Total U.S. P/C Agency $21,169 4.1
Total U.S. P/C Direct $34,181 6.6
Total U.S. P/C Other $51 1.4
Total U.S. P/C Industry $55,401 5.3
Total
Invested % of
Rank Group Name Assets Assets
1 State Farm Group $74,670 88.6
2 Berkshire Hathaway Ins Group 71,005 90.1
3 Amer Intl Group Inc 40,125 67.2
4 Travelers Prop Cas Group 36,892 85.1
5 Allstate Ins Group 34,963 85.6
6 Zurich/Farmers Group 24,906 74.0
7 Liberty Mutual Ins Cos 24,627 77.3
8 CNA Ins Cos 26,182 84.8
9 Nationwide Group 20,524 76.5
10 Hartford Ins Group 21,316 82.7
11 St Paul Cos 18,609 83.8
12 GE Global Ins Group 18,546 84.7
13 Chubb Group of Ins Cos 17,927 82.3
14 USAA Group 13,444 87.3
15 Allianz of America Inc 12,280 83.4
16 Munich Reins Group 11,943 81.5
17 Progressive Ins Group 9,251 70.5
18 State Comp Ins Fund of Calif 11,125 95.7
19 Swiss Reins Group 9,036 80.1
20 White Mountains Ins Group 8,875 84.2
21 Ace INA Group 5,740 56.3
22 Safeco Ins Cos 8,315 84.2
23 Fairfax Finl (US) Group 7,858 80.4
24 Royal & SunAlliance USA 7,073 75.0
25 MBIA Grow 9,132 99.1
Total Top 25 P/C Writers $544,366 82.3
Total U.S. P/C Stock $551,516 81.5
Total U.S. P/C Mutual $224,618 83.5
Total U.S. P/C Lloyds $270 78.8
Total U.S. P/C Reciprocal $56,179 79.8
Total U.S. P/C State Fund $21,909 95.0
Total U.S. P/C Agency $409,454 79.0
Total U.S. P/C Direct $443,669 85.4
Total U.S. P/C Other $3,368 91.8
Total U.S. P/C Industry $856,491 82.2
Agents'
Balances % of
Rank Group Name Collected Assets
1 State Farm Group $792 0.9
2 Berkshire Hathaway Ins Group 2,051 2.6
3 Amer Intl Group Inc 1,841 3.1
4 Travelers Prop Cas Group 887 2.0
5 Allstate Ins Group 899 2.2
6 Zurich/Farmers Group 1,819 5.4
7 Liberty Mutual Ins Cos 1,101 3.5
8 CNA Ins Cos 1,611 5.2
9 Nationwide Group 1,673 6.2
10 Hartford Ins Group 645 2.5
11 St Paul Cos 912 4.1
12 GE Global Ins Group 1,077 4.9
13 Chubb Group of Ins Cos 1,586 7.3
14 USAA Group 340 2.2
15 Allianz of America Inc 567 3.9
16 Munich Reins Group 207 1.4
17 Progressive Ins Group 207 1.6
18 State Comp Ins Fund of Calif 100 0.9
19 Swiss Reins Group 83 0.7
20 White Mountains Ins Group 85 0.8
21 Ace INA Group 392 3.8
22 Safeco Ins Cos 129 1.3
23 Fairfax Finl (US) Group 350 3.6
24 Royal & SunAlliance USA 564 6.0
25 MBIA Grow 7 0.1
Total Top 25 P/C Writers $19,926 3.0
Total U.S. P/C Stock $25,809 3.8
Total U.S. P/C Mutual $8,681 3.2
Total U.S. P/C Lloyds $33 9.7
Total U.S. P/C Reciprocal $3,433 4.7
Total U.S. P/C State Fund $240 1.0
Total U.S. P/C Agency $22,845 4.4
Total U.S. P/C Direct $15,314 2.9
Total U.S. P/C Other $37 1.0
Total U.S. P/C Industry $38,196 3.7
Agents'
Balances % of
Rank Group Name Deferred Assets
1 State Farm Group $6,112 7.3
2 Berkshire Hathaway Ins Group 792 1.0
3 Amer Intl Group Inc 3,608 6.0
4 Travelers Prop Cas Group 2,821 6.5
5 Allstate Ins Group 3,048 7.5
6 Zurich/Farmers Group 3,582 10.6
7 Liberty Mutual Ins Cos 2,676 8.4
8 CNA Ins Cos 777 2.5
9 Nationwide Group 1,670 6.2
10 Hartford Ins Group 1,660 6.4
11 St Paul Cos 1,285 5.8
12 GE Global Ins Group 895 4.1
13 Chubb Group of Ins Cos 809 3.7
14 USAA Group 1,007 6.5
15 Allianz of America Inc 226 1.5
16 Munich Reins Group 878 6.0
17 Progressive Ins Group 2,429 18.5
18 State Comp Ins Fund of Calif 204 1.8
19 Swiss Reins Group 701 6.2
20 White Mountains Ins Group 769 7.3
21 Ace INA Group 636 6.2
22 Safeco Ins Cos 770 7.8
23 Fairfax Finl (US) Group 435 4.5
24 Royal & SunAlliance USA 476 5.0
25 MBIA Grow 0 0.0
Total Top 25 P/C Writers $38,268 5.8
Total U.S. P/C Stock $34,292 5.1
Total U.S. P/C Mutual $18,780 7.0
Total U.S. P/C Lloyds $16 4.7
Total U.S. P/C Reciprocal $6,277 8.6
Total U.S. P/C State Fund $625 2.7
Total U.S. P/C Agency $31,849 6.1
Total U.S. P/C Direct $28,114 5.4
Total U.S. P/C Other $28 0.8
Total U.S. P/C Industry $59,991 5.8
All
Other % of
Rank Group Name Assets Assets
1 State Farm Group $2,722 3.2
2 Berkshire Hathaway Ins Group 4,946 6.3
3 Amer Intl Group Inc 14,105 23.6
4 Travelers Prop Cas Group 2,761 6.4
5 Allstate Ins Group 1,957 4.8
6 Zurich/Farmers Group 3,360 10.0
7 Liberty Mutual Ins Cos 3,439 10.8
8 CNA Ins Cos 2,313 7.5
9 Nationwide Group 2,945 11.0
10 Hartford Ins Group 2,156 8.4
11 St Paul Cos 1,406 6.3
12 GE Global Ins Group 1,385 6.3
13 Chubb Group of Ins Cos 1,457 6.7
14 USAA Group 613 4.0
15 Allianz of America Inc 1,654 11.2
16 Munich Reins Group 1,619 11.1
17 Progressive Ins Group 1,232 9.4
18 State Comp Ins Fund of Calif 193 1.7
19 Swiss Reins Group 1,461 13.0
20 White Mountains Ins Group 813 7.7
21 Ace INA Group 3,420 33.6
22 Safeco Ins Cos 660 6.7
23 Fairfax Finl (US) Group 1,130 11.6
24 Royal & SunAlliance USA 1,322 14.0
25 MBIA Grow 76 0.8
Total Top 25 P/C Writers $59,146 8.9
Total U.S. P/C Stock $65,020 9.6
Total U.S. P/C Mutual $17,069 6.3
Total U.S. P/C Lloyds $23 6.8
Total U.S. P/C Reciprocal $5,009 6.9
Total U.S. P/C State Fund $293 1.3
Total U.S. P/C Agency $54,467 10.5
Total U.S. P/C Direct $32,711 6.3
Total U.S. P/C Other $237 6.5
Total U.S. P/C Industry $87,415 8.4
Total
Admitted
Rank Group Name Assets
1 State Farm Group $84,295
2 Berkshire Hathaway Ins Group 78,794
3 Amer Intl Group Inc 59,678
4 Travelers Prop Cas Group 43,362
5 Allstate Ins Group 40,868
6 Zurich/Farmers Group 33,668
7 Liberty Mutual Ins Cos 31,843
8 CNA Ins Cos 30,884
9 Nationwide Group 26,812
10 Hartford Ins Group 25,777
11 St Paul Cos 22,212
12 GE Global Ins Group 21,903
13 Chubb Group of Ins Cos 21,779
14 USAA Group 15,404
15 Allianz of America Inc 14,728
16 Munich Reins Group 14,647
17 Progressive Ins Group 13,120
18 State Comp Ins Fund of Calif 11,623
19 Swiss Reins Group 11,281
20 White Mountains Ins Group 10,542
21 Ace INA Group 10,188
22 Safeco Ins Cos 9,874
23 Fairfax Finl (US) Group 9,773
24 Royal & SunAlliance USA 9,436
25 MBIA Grow 9,215
Total Top 25 P/C Writers $661,707
Total U.S. P/C Stock $676,639
Total U.S. P/C Mutual $269,148
Total U.S. P/C Lloyds $342
Total U.S. P/C Reciprocal $72,098
Total U.S. P/C State Fund $23,067
Total U.S. P/C Agency $518,615
Total U.S. P/C Direct $519,809
Total U.S. P/C Other $3,871
Total U.S. P/C Industry $1,042,095
Grass Yield on
Invested Assets
Rank Group Name 2002 2001 2000
1 State Farm Group 5.1 4.8 4.8
2 Berkshire Hathaway Ins Group 4.5 4.0 4.1
3 Amer Intl Group Inc 4.6 5.7 6.1
4 Travelers Prop Cas Group 5.4 6.5 6.9
5 Allstate Ins Group 5.6 6.2 6.0
6 Zurich/Farmers Group 5.2 5.8 5.9
7 Liberty Mutual Ins Cos 7.0 6.1 6.0
8 CNA Ins Cos 7.5 5.3 7.1
9 Nationwide Group 5.1 5.0 5.2
10 Hartford Ins Group 6.8 6.1 8.0
11 St Paul Cos 6.5 6.7 9.7
12 GE Global Ins Group 14.9 4.4 4.6
13 Chubb Group of Ins Cos 5.1 5.6 5.8
14 USAA Group 6.6 7.0 7.0
15 Allianz of America Inc 4.7 4.5 4.0
16 Munich Reins Group 5.2 5.8 6.1
17 Progressive Ins Group 5.1 5.9 5.7
18 State Comp Ins Fund of Calif 5.8 6.9 6.8
19 Swiss Reins Group 4.5 5.7 5.8
20 White Mountains Ins Group 4.3 5.3 5.5
21 Ace INA Group 4.7 5.2 7.4
22 Safeco Ins Cos 5.9 5.9 6.0
23 Fairfax Finl (US) Group 5.1 6.4 5.3
24 Royal & SunAlliance USA 5.3 5.5 5.8
25 MBIA Grow 5.2 5.7 6.1
Total Top 25 P/C Writers 5.7 5.4 5.8
Total U.S. P/C Stock 5.5 5.5 5.9
Total U.S. P/C Mutual 5.4 5.4 5.3
Total U.S. P/C Lloyds 2.4 5.2 6.2
Total U.S. P/C Reciprocal 5.4 5.7 5.8
Total U.S. P/C State Fund 5.3 6.1 6.3
Total U.S. P/C Agency 5.4 5.7 6.3
Total U.S. P/C Direct 5.6 5.2 5.3
Total U.S. P/C Other 4.2 4.9 6.1
Total U.S. P/C Industry 5.5 5.5 5.7
Source: A.M. Best Co. data.
Asset Distribution, Top Life Writers--2002
Rank is based on total assets for 2002.
($ Millions)
% of
Rank Group Name AMB# Bonds Assets
1 Metropolitan Life & Affil 70192 $122,499 50.0
2 Amer Intl Group 70342 148,461 63.5
3 Prudential of America Group 70189 87,153 42.4
4 Aegon USA Inc 69707 81,150 56.1
5 TIAA Group 70362 99,391 68.8
6 Hartford Life Inc 70116 26,717 19.5
7 ING Group 70153 57,142 45.4
8 New York Life Group 69714 69,828 57.3
9 Northwestern Mutual Group 69515 50,597 49.2
10 Nationwide Group 70350 25,330 29.0
11 MassMutual Finl Group 69702 29,416 34.9
12 John Hancock Finl Svcs Group 70170 41,066 51.8
13 Equitable Group 70194 25,092 31.9
14 Principal Life Ins Co 06150 31,105 39.9
15 Citigroup 70128 34,143 45.5
16 Cigna Corp 70173 22,173 30.7
17 Lincoln Natl Corp 70351 28,536 40.2
18 GE Finl Assur Group 69555 52,499 74.9
19 Allstate Finl 70106 36,447 57.1
20 Amer Express Finl 69689 22,330 40.5
21 Pacific Life Group 69720 20,467 39.4
22 Sun Life of Canada Group 69740 21,504 43.3
23 Manulife Finl 69542 10,554 21.7
24 Jackson Natl Group 69578 33,212 71.0
25 Thrivent Finl Lutherans 06008 24,767 60.1
Total Top 25 Life Writers $1,201,578 47.8
Total U.S. Life Industry $1,750,408 50.9
Preferred % of
Rank Group Name Stock Assets
1 Metropolitan Life & Affil $1,572 0.6
2 Amer Intl Group 299 0.1
3 Prudential of America Group 182 0.1
4 Aegon USA Inc 697 0.5
5 TIAA Group 927 0.6
6 Hartford Life Inc 292 0.2
7 ING Group 278 0.2
8 New York Life Group 364 0.3
9 Northwestern Mutual Group 811 0.8
10 Nationwide Group 11 0.0
11 MassMutual Finl Group 227 0.3
12 John Hancock Finl Svcs Group 734 0.9
13 Equitable Group 940 1.2
14 Principal Life Ins Co 421 0.5
15 Citigroup 3,373 4.5
16 Cigna Corp 95 0.1
17 Lincoln Natl Corp 184 0.3
18 GE Finl Assur Group 256 0.4
19 Allstate Finl 374 0.6
20 Amer Express Finl 0 0.0
21 Pacific Life Group 81 0.2
22 Sun Life of Canada Group 12 0.0
23 Manulife Finl 15 0.0
24 Jackson Natl Group 97 0.2
25 Thrivent Finl Lutherans 159 0.4
Total Top 25 Life Writers $12,400 0.5
Total U.S. Life Industry $24,399 0.7
Common % of
Rank Group Name Stock Assets
1 Metropolitan Life & Affil $3,114 1.3
2 Amer Intl Group 8,010 3.4
3 Prudential of America Group 3,812 1.9
4 Aegon USA Inc 532 0.4
5 TIAA Group 4,037 2.8
6 Hartford Life Inc 570 0.4
7 ING Group 490 0.4
8 New York Life Group 3,160 2.6
9 Northwestern Mutual Group 4,091 4.0
10 Nationwide Group 74 0.1
11 MassMutual Finl Group 1,316 1.6
12 John Hancock Finl Svcs Group 852 1.1
13 Equitable Group 1,193 1.5
14 Principal Life Ins Co 1,124 1.4
15 Citigroup 1,117 1.5
16 Cigna Corp 1,024 1.4
17 Lincoln Natl Corp 484 0.7
18 GE Finl Assur Group 218 0.3
19 Allstate Finl 75 0.1
20 Amer Express Finl 25 0.0
21 Pacific Life Group 147 0.3
22 Sun Life of Canada Group 615 1.2
23 Manulife Finl 641 1.3
24 Jackson Natl Group 344 0.7
25 Thrivent Finl Lutherans 1,409 3.4
Total Top 25 Life Writers $38,475 1.5
Total U.S. Life Industry $57,541 1.7
% of
Rank Group Name Mortgages Assets
1 Metropolitan Life & Affil $26,450 10.8
2 Amer Intl Group 10,416 4.5
3 Prudential of America Group 13,709 6.7
4 Aegon USA Inc 12,585 8.7
5 TIAA Group 23,915 16.6
6 Hartford Life Inc 334 0.2
7 ING Group 9,472 7.5
8 New York Life Group 10,010 8.2
9 Northwestern Mutual Group 15,692 15.2
10 Nationwide Group 8,373 9.6
11 MassMutual Finl Group 7,469 8.9
12 John Hancock Finl Svcs Group 10,117 12.8
13 Equitable Group 3,832 4.9
14 Principal Life Ins Co 7,664 9.8
15 Citigroup 1,930 2.6
16 Cigna Corp 8,354 11.6
17 Lincoln Natl Corp 4,128 5.8
18 GE Finl Assur Group 5,407 7.7
19 Allstate Finl 5,181 8.1
20 Amer Express Finl 3,452 6.3
21 Pacific Life Group 3,187 6.1
22 Sun Life of Canada Group 2,758 5.6
23 Manulife Finl 1,952 4.0
24 Jackson Natl Group 3,333 7.1
25 Thrivent Finl Lutherans 5,616 13.6
Total Top 25 Life Writers $205,338 8.2
Total U.S. Life Industry $250,731 7.3
Real % of
Rank Group Name Estate Assets
1 Metropolitan Life & Affil $5,000 2.0
2 Amer Intl Group 264 0.1
3 Prudential of America Group 585 0.3
4 Aegon USA Inc 359 0.2
5 TIAA Group 1,885 1.3
6 Hartford Life Inc 25 0.0
7 ING Group 216 0.2
8 New York Life Group 553 0.5
9 Northwestern Mutual Group 1,503 1.5
10 Nationwide Group 138 0.2
11 MassMutual Finl Group 1,846 2.2
12 John Hancock Finl Svcs Group 605 0.8
13 Equitable Group 302 0.4
14 Principal Life Ins Co 422 0.5
15 Citigroup 27 0.0
16 Cigna Corp 356 0.5
17 Lincoln Natl Corp 273 0.4
18 GE Finl Assur Group 50 0.1
19 Allstate Finl 69 0.1
20 Amer Express Finl 48 0.1
21 Pacific Life Group 151 0.3
22 Sun Life of Canada Group 495 1.0
23 Manulife Finl 1,072 2.2
24 Jackson Natl Group 91 0.2
25 Thrivent Finl Lutherans 198 0.5
Total Top 25 Life Writers $16,532 0.7
Total U.S. Life Industry $22,106 0.6
Policy % of
Rank Group Name Loans Assets
1 Metropolitan Life & Affil $8,529 3.5
2 Amer Intl Group 3,638 1.6
3 Prudential of America Group 8,095 3.9
4 Aegon USA Inc 1,611 1.1
5 TIAA Group 495 0.3
6 Hartford Life Inc 2,912 2.1
7 ING Group 2,958 2.4
8 New York Life Group 6,231 5.1
9 Northwestern Mutual Group 9,292 9.0
10 Nationwide Group 980 1.1
11 MassMutual Finl Group 6,448 7.7
12 John Hancock Finl Svcs Group 2,014 2.5
13 Equitable Group 4,031 5.1
14 Principal Life Ins Co 818 1.0
15 Citigroup 1,183 1.6
16 Cigna Corp 2,132 3.0
17 Lincoln Natl Corp 1,938 2.7
18 GE Finl Assur Group 977 1.4
19 Allstate Finl 1,229 1.9
20 Amer Express Finl 597 1.1
21 Pacific Life Group 5,113 9.8
22 Sun Life of Canada Group 1,107 2.2
23 Manulife Finl 2,369 4.9
24 Jackson Natl Group 718 1.5
25 Thrivent Finl Lutherans 1,258 3.1
Total Top 25 Life Writers $76,675 3.0
Total U.S. Life Industry $106,538 3.1
Cash &
Short-Term % of
Investments Assets
Rank Group Name
$2,701 1.1
1 Metropolitan Life & Affil 1,656 0.7
2 Amer Intl Group 9,193 4.5
3 Prudential of America Group 2,412 1.7
4 Aegon USA Inc 1,957 1.4
5 TIAA Group 1,003 0.7
6 Hartford Life Inc 1,687 1.3
7 ING Group 3,813 3.1
8 New York Life Group 1,814 1.8
9 Northwestern Mutual Group 229 0.3
10 Nationwide Group 8,938 10.6
11 MassMutual Finl Group 991 1.2
12 John Hancock Finl Svcs Group 460 0.6
13 Equitable Group 417 0.5
14 Principal Life Ins Co 4,482 6.0
15 Citigroup 934 1.3
16 Cigna Corp 1,149 1.6
17 Lincoln Natl Corp 879 1.3
18 GE Finl Assur Group 1,049 1.6
19 Allstate Finl 4,409 8.0
20 Amer Express Finl 568 1.1
21 Pacific Life Group 911 1.8
22 Sun Life of Canada Group 1,056 2.2
23 Manulife Finl 2,428 5.2
24 Jackson Natl Group 2,298 5.6
25 Thrivent Finl Lutherans $57,433 2.3
Total Top 25 Life Writers $86,514 2.5
Total U.S. Life Industry
Separate % of
Rank Group Name Accounts Assets
1 Metropolitan Life & Affil $60,417 24.7
2 Amer Intl Group 49,998 21.4
3 Prudential of America Group $73,096 35.5
4 Aegon USA Inc 36,150 25.0
5 TIAA Group 4,484 3.1
6 Hartford Life Inc 102,215 74.7
7 ING Group 50,316 40.0
8 New York Life Group 12,887 10.6
9 Northwestern Mutual Group 10,246 10.0
10 Nationwide Group 50,900 58.2
11 MassMutual Finl Group 23,041 27.4
12 John Hancock Finl Svcs Group 17,656 22.3
13 Equitable Group 39,194 49.8
14 Principal Life Ins Co 33,373 42.8
15 Citigroup 25,898 34.5
16 Cigna Corp 33,281 46.1
17 Lincoln Natl Corp 32,078 45.2
18 GE Finl Assur Group 7,591 10.8
19 Allstate Finl 17,962 28.2
20 Amer Express Finl 22,273 40.4
21 Pacific Life Group 19,241 37.0
22 Sun Life of Canada Group 20,232 40.8
23 Manulife Finl 29,929 61.5
24 Jackson Natl Group 4,387 9.4
25 Thrivent Finl Lutherans 4,798 11.6
Total Top 25 Life Writers $781,642 31.1
Total U.S. Life Industry $963,274 28.0
Other % of
Rank Group Name Assets Assets
1 Metropolitan Life & Affil $14,694 6.0
2 Amer Intl Group 10,926 4.7
3 Prudential of America Group 9,908 4.8
4 Aegon USA Inc 9,040 6.3
5 TIAA Group 7,386 5.1
6 Hartford Life Inc 2,766 2.0
7 ING Group 3,275 2.6
8 New York Life Group 15,093 12.4
9 Northwestern Mutual Group 8,890 8.6
10 Nationwide Group 1,405 1.6
11 MassMutual Finl Group 5,507 6.5
12 John Hancock Finl Svcs Group 5,298 6.7
13 Equitable Group 3,661 4.7
14 Principal Life Ins Co 2,657 3.4
15 Citigroup 2,866 3.8
16 Cigna Corp 3,903 5.4
17 Lincoln Natl Corp 2,196 3.1
18 GE Finl Assur Group 2,232 3.2
19 Allstate Finl 1,407 2.2
20 Amer Express Finl 1,999 3.6
21 Pacific Life Group 3,013 5.8
22 Sun Life of Canada Group 1,986 4.0
23 Manulife Finl 1,091 2.2
24 Jackson Natl Group 2,155 4.6
25 Thrivent Finl Lutherans 701 1.7
Total Top 25 Life Writers $124,056 4.9
Total U.S. Life Industry $176,569 5.1
Total
Assets
Rank Group Name
$244,975
1 Metropolitan Life & Affil 233,668
2 Amer Intl Group 205,733
3 Prudential of America Group 144,535
4 Aegon USA Inc 144,478
5 TIAA Group 136,833
6 Hartford Life Inc 125,835
7 ING Group 121,939
8 New York Life Group 102,935
9 Northwestern Mutual Group 87,440
10 Nationwide Group 84,208
11 MassMutual Finl Group 79,332
12 John Hancock Finl Svcs Group 78,706
13 Equitable Group 78,002
14 Principal Life Ins Co 75,021
15 Citigroup 72,252
16 Cigna Corp 70,964
17 Lincoln Natl Corp 70,110
18 GE Finl Assur Group 63,792
19 Allstate Finl 55,134
20 Amer Express Finl 51,967
21 Pacific Life Group 49,620
22 Sun Life of Canada Group 48,681
23 Manulife Finl 46,765
24 Jackson Natl Group 41,204
25 Thrivent Finl Lutherans $2,514,129
Total Top 25 Life Writers $3,438,081
Total U.S. Life Industry
Not Yield on
Invested Assets
Before Federal
Income Tax, if Any
Rank Group Name 2002 2001 2000
1 Metropolitan Life & Affil 6.7 7.4 7.5
2 Amer Intl Group 6.5 7.0 6.9
3 Prudential of America Group 6.0 6.0 6.5
4 Aegon USA Inc 6.1 7.2 7.4
5 TIAA Group 7.3 7.6 7.9
6 Hartford Life Inc 6.3 7.1 7.0
7 ING Group 6.4 7.0 7.2
8 New York Life Group 6.3 7.3 7.3
9 Northwestern Mutual Group 6.5 7.1 7.3
10 Nationwide Group 6.6 7.3 7.5
11 MassMutual Finl Group 7.1 7.6 7.6
12 John Hancock Finl Svcs Group 6.9 7.6 8.1
13 Equitable Group 7.3 7.7 12.1
14 Principal Life Ins Co 7.4 8.0 7.9
15 Citigroup 6.6 7.0 7.7
16 Cigna Corp 7.3 7.8 7.8
17 Lincoln Natl Corp 6.6 6.9 7.0
18 GE Finl Assur Group 6.1 6.8 7.4
19 Allstate Finl 6.6 7.2 7.4
20 Amer Express Finl 5.5 5.8 7.2
21 Pacific Life Group 7.9 7.3 7.6
22 Sun Life of Canada Group 5.4 6.3 6.9
23 Manulife Finl 7.2 8.0 8.0
24 Jackson Natl Group 6.0 6.5 7.2
25 Thrivent Finl Lutherans 6.2 6.7 6.9
Total Top 25 Life Writers 6.6 7.1 7.5
Total U.S. Life Industry 6.6 7.0 7.3
Not Yield
on Invested
Assets
Before
Federal
Income Tax,
if Any
Rank Group Name 1999 1998
1 Metropolitan Life & Affil 7.5 7.6
2 Amer Intl Group 6.9 7.1
3 Prudential of America Group 7.2 7.1
4 Aegon USA Inc 7.4 7.5
5 TIAA Group 7.8 8.0
6 Hartford Life Inc 6.9 8.9
7 ING Group 7.3 7.6
8 New York Life Group 7.0 7.4
9 Northwestern Mutual Group 7.0 7.2
10 Nationwide Group 7.3 7.9
11 MassMutual Finl Group 7.3 7.4
12 John Hancock Finl Svcs Group 7.5 7.8
13 Equitable Group 7.3 7.5
14 Principal Life Ins Co 7.5 7.1
15 Citigroup 7.7 7.1
16 Cigna Corp 7.7 7.3
17 Lincoln Natl Corp 7.1 7.4
18 GE Finl Assur Group 7.7 7.8
19 Allstate Finl 7.6 7.4
20 Amer Express Finl 7.5 7.7
21 Pacific Life Group 7.8 7.9
22 Sun Life of Canada Group 8.3 8.5
23 Manulife Finl 7.8 8.2
24 Jackson Natl Group 7.4 7.6
25 Thrivent Finl Lutherans 6.7 6.9
Total Top 25 Life Writers 7.3 7.5
Total U.S. Life Industry 7.3 7.4
Source: A.M. Best Co. data.
Massachusetts Mutual Asset Investment Profile
Diversity is key to the life insurer's investment strategy.
($ Thousands)
Bonds $27,781,696
From Separate Accounts Statement $16,439,389
Mortgage Loans $7,048,267
Policy Loans $6,253,687
Aggregate Write-ins for Invested Assets $1,882,885
Real Estate $1,843,695
Common Stocks $1,654,518
Other Invested Assets $1,193,716
Investment Income Due and Accrued $842,534
Other Assets $827,560
Life Insurance Premiums and Annuity
Considerations Deferred and
Uncollected on In Force Business $587,353
Preferred Stocks $219,079
Receivable for
Securities $14,305
Premium Notes $0
Accident and Health Premiums Due and Unpaid -$4,206
Source: A.M. Best Executive Summary Report
Note: Table made from bar graph.
|
|
||||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion