Health, life insurers' 2001 profits drop 57 percent - In the News - representing more than $11 billion loss - Brief Article - Statistical Data Included

Healthcare Financial Management, April, 2002

Health and life insurers' profits declined more than $11 billion, or 57 percent, during the first nine months of 2001, compared with the same period in 2000, according to Weiss Ratings, Inc., Palm Beach Gardens, Florida. Similarly, the industry's return on assets fell 57 percent to 0.28 percent, and its return on equity fell 58 percent to 3.9 percent for the first nine months of 2001. The profit declines result primarily from a $3.3 billion capital loss on the sale of invested assets as of September 30, 2001. By comparison, sale of invested assets during the first nine months of 2000 produced a $2.4 billion capital gain.

Health and life insurers also suffered a 2.6 percent reduction in capital and surplus, from $225.7 billion during the first nine months of 2000 to $219.8 billion during the first nine months of 2001. This decline resulted mainly from a $12.3 billion unrealized capital loss. Health and life insurers can improve their ability to weather bad times by investing more conservatively, building their capital, or both, according to Weiss Ratings.