The nation’s Blue Cross and Blue Shield licensees collectively suffered a 40.9% decline in net income last year, fueled by decreases in both underwriting and investment income, as well as realized losses.

An A.M. Best Co. study of aggregate results for the 37 local and regional licenses – including Highmark Inc., Independence Blue Cross, Horizon Blue Cross of New Jersey, CareFirst and Anthem – showed a 6.6% increase in net premiums written last year, marking a slight increase from the 5.9% reported for 2007. In 2006, net premium written rose 9.1%.

The health care expense ratio improved 20 basis points (bps) to 85.9%, the study found.

Capital and surplus fell 10.3%, to $41.6 billion, marking the lowest level since 2005.

Underwriting earnings declined for the third year in a row, although the 5.5% decrease in 2008 was much less than the 24.6% slide in 2007 and 8.5% fall in 2006.

Investment income dropped 19%, while an unrealized loss of $3.1 billion was reported for 2008, compared with gains of $285.5 million in 2007 and $1.9 billion in 2006, the study found.