Fitch: Life Industry Strong Despite Exposure

Despite its exposure to the deteriorating subprime mortgage market, the U.S. life insurance industry is "well-positioned to withstand current market volatility," according to Fitch Ratings. The rating agency estimated that unrealized mark-to-market losses on investments related to subprime and alternative-A mortgages range from $7 billion to $8 billion in the industry. That represents approximately 13% of exposure and 3% of aggregate industry statutory capital, Fitch said in a report titled Subprime Mortgage Exposure for U.S. Life Insurers -- Update and Outlook. "While Fitch expects further deterioration in the performance of subprime residential mortgages, particularly for 2006 and 2007 vintage years, our analysis suggests that the industry is well positioned to withstand current market volatility given its focus on high-investment-grade securities, relatively stable liability profile, and positive cash flow," the rating agency said. "Despite the significant deterioration of subprime mortgage markets and increased credit risk in other fixed-income markets, Fitch views the U.S. life insurance industry as well capitalized." Fitch can be found online at http://www.fitchratings.com.