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The U.S. insurance industry's exposure to securities issued by the two GSEs is substantial for a handful of companies. Nevertheless, A.M. Best Co. does not foresee substantial write-downs, as much of the industry's exposure represents fixed-income securities, which should benefit from the added financial backing of the federal government.
-- The U.S. insurance industry's investments in securities issued by Fannie Mae and Freddie Mac totaled about $371 billion as of year-end 2007, according to A.M. Best's Schedule D product.
-- Investments in fixed-income securities at $366.4 billion represented the industry's primary exposure to the two GSEs, though $4.0 billion was invested in preferred stock and only $265 million in common stock.
-- The U.S. property/casualty (P/C) industry's total exposure to securities issued by the two GSEs represented 23% of year-end 2007 policyholder surplus.
-- The P/C industry's exposure totaled about $115.5 billion as of year-end 2007, with $112.4 billion invested in fixed-income securities, $2.9 billion in preferred stock and $223.4 million in common stock.
-- The U.S. life/health industry's total exposure to securities issued by the two GSEs represented about 75% of year-end 2007 capital and surplus.
-- The life/health industry's exposure totaled about $255 billion as of year-end 2007, most of which--$254 billion--was invested in fixed-income securities issued by the two GSEs.
BestWeek subscribers can download a PDF copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com.
Nonsubscribers can download a PDF copy of the full special report (4 pages) for $30 or a combination of the PDF copy plus the spreadsheet file of the report data for $55 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
SOURCE: A.M. Best
A.M. Best Analysts Edward Keane--P/C 908-439-2200, ext. 5291 edward.keane@ambest.com or Andrew Edelsberg--L/H 908-439-2200, ext. 5182 andrew.edelsberg@ambest.com OR Public Relations Jim Peavy 908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Morrow 908-439-2200, ext. 5378 rachelle.morrow@ambest.com
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