Fitch Rates Life Negative, Health Stable, LTC Mixed

Life insurers are also coping with the aftermath of the Sept. 11 attacks and the effects of big changes in federal tax laws, the analysts write.

But the analysts say the pressure is starting to moderate, and that they may soon raise their life outlook rating to stable.

"Despite the negative rating outlook, the North American life industry continues to demonstrate very high financial strength and credit profile," the analysts write. "This very strong financial profile compares favorably to [that of] other financial services competitors such as banks, securities firms, mutual fund companies and asset management firms."

The Fitch long-term care analysts have not published an overall industry outlook rating for LTC insurance, but they observe that LTC issuers face a combination of strong potential market demand and the difficulty of learning to manage a complicated, capital-intensive product with a long liability tail.

"LTC insurance could become a highly rewarding niche for those companies that understand the risk and price correctly, or a misfortune for those without the proper discipline," the analysts conclude.

The Fitch reports are available on the Web, at http://www.fitchratings.com/corporate/sectors/criteria_rpt.cfm?sector_flag=4&marketsector=1&detail=