The financial crisis of 2008 could “dramatically influence” strategic decisions in the life insurance industry for years, a new study suggests.

Stephan Christiansen

“The 2008 financial crisis and its impact on the life insurance industry will likely resonate with industry executives for some time to come,” said Stephan Christiansen, director of research at Conning Research & Consulting, which performed the study.

“The industry has been finalizing its tactical responses to the market dislocations and its initial recapitalization during the course of this year,” he added.

Christiansen gave a prescription for life insurance industry in 2010.

“Life insurers and annuity providers must now move on to plan both investment and product strategies in this lower return environment,” he said in a statement.

“During the five-year period of our study of life insurance investments, the industry stretched for yield and moved towards more aggressive assets,” said Gregory Smith, an analyst who worked on the study at Conning. “This shift produced initial positive results in 2006 and 2007, as insurers achieved bigger spreads over risk-free rates. Yet the market dislocations of 2008 and the resulting capital hits have had a profound effect on the industry.”

The Conning Research study analyzes life industry investments from 2004 to 2008.