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Saddled with net realized capital losses of $5.31 billion, the life insurance industry saw sharply lower net income in the first quarter, according to calculations based on recently released SNL's statutory insurance data.
Aggregate operating income before taxes and realized capital losses totaled $7.07 billion during the period, down 41.8% from the first quarter of 2007. Statutory net income, including the impact of realized capital losses, amounted to only $545.1 million, a decline of 94.8% year over year. But the numbers may not be as dismal across the board as they may seem at first glance.
Excluding 16 domestic life insurance units of American International Group Inc., the life industry's aggregate statutory net income amounted to $3.24 billion during the quarter, according to calculations based on SNL data. That would imply a 62.5% year-over-year decline. But the industry's pretax operating income retreated by 40.3% when excluding the AIG units, only a slight improvement to the overall rate of decline.
Net realized capital losses, specifically those taken by the AIG subsidiaries, took a significant portion of the blame for the life industry's overall weakness. Excluding the decidedly negative impact of the AIG units' results, the industry's sum of net realized capital losses totaled $1.61 billion in the first quarter. Including the AIG companies, the industry's net realized capital loss balloons to $5.31 billion, and units AIG Annuity Insurance Co., Variable Annuity Life Insurance Co., SunAmerica Life Insurance Co. and American General Life Insurance Co. posted four of the industry's five largest net realized capital losses in the quarter.
Not coincidentally, those four AIG units are the largest participants on a percentage basis in AIG's domestic securities lending collateral account, which saw large other-than-temporary and temporary impairments. AIG...
