by John Darer® CLU ChFC MSSC RSP CLTC
"The bulk of the assets in the life and annuity insurance industry are controlled by relatively strong and stable institutions, making it stronger overall than the banking industry," said Martin D. Weiss, president of Weiss Ratings, the only major rating agency that accepts no payments from the institutions that it rates. "Although profitability in the industry fell during the debt crisis and then recovered last year, the strongest insurers remained financially healthy throughout the market turmoil. But that does not preclude future failures among the weakest, especially if the economy experiences another downturn." June 10, 2010
Life and annuity insurers (which include companies that issue structured settlement annuities) reported a dramatic turnaround in profits in 2009, earning $21.1 billion compared to a $51.8 billion loss in 2008. This improvement was primarily due to a $45 billion decrease in the amount of additional reserves that were set aside as well as a decrease in net realized losses on investments, which dropped from $50.5 billion in 2008 to $28.7 billion in 2009.
Weiss outperformed Standard and Poor's, Moody's, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a 1994 landmark study by the U.S. Government Accountability Office (GAO) responding to the 1991-1992 financial crisis, while also outperforming its competitors in identifying the strongest insurers, according to its follow-up study using the GAO's research methodology. According to a leading consumer publication's May 2009 study of life insurance ratings by Fitch, Moody's, S&P, A.M Best and Weiss Ratings, Weiss Ratings (formerly TheStreet.com Ratings) "was the toughest grader with independent and objective ratings."