Life insurance companies on better financial footing than during economic downturn

Oct 06, 2011

Life insurance companies look to be in better shape after the recent economic disaster.

Even if the market sinks back into a recession, Investment News said that investors and policyholders can rest assured about the financial state of big life insurance companies.

The news source said that since 2008-09, many insurers have bolstered cash reserves and reduced their holdings of high-risk investments. Steven Schwartz, a life insurance analyst at Raymond James and Associates, said holding companies are hanging onto more cash now, some double to triple the amount they previously held, to cover their debts if companies couldn't borrow money.

"Capital levels are substantially higher than in 2008 and that gives the companies the ability to weather any storm,” he said in Investment News.

One company, Imperial Holdings, a specialty finance company providing liquidity solutions with a focus on individual life insurance policies, said its second quarter earnings were up to $10.44 from $9.82. The company said its revenue during the second quarter of 2011 was $29.2 million, far ahead from a year ago when it had a revenue of $20.6 million in the second quarter.

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