http://www.bloomberg.com/apps/news?pid=20601087&sid=aI2HJjlab9aQ&refer=home Life Insurers Face âUnprecedented Stress,â S&P Says (Update2) Share | Email | Print | A A A By Andrew Frye April 15 (Bloomberg) -- U.S. life insurers, a group led by MetLife Inc. and Prudential Financial Inc., face âunprecedented stressâ on holdings in bonds and commercial mortgages in the next 18 months, Standard & Poorâs said. âThe U.S. is in the midst of perhaps its longest recession in a generation, and our economists believe it is just entering its most difficult phase,â the ratings firm said today in a statement. Life insurance stocks have lost more than half their market value in the past 12 months as declines in fixed-income holdings drained capital. Losses and profit declines have discouraged investors in the industryâs stocks and bonds and left life insurers waiting for a response from the Treasury on requests for federal bailout funds. MetLife, the biggest U.S. life insurer, has dropped 55 percent in the last 12 months of New York Stock Exchange composite trading, while No. 2 Prudential is down 66 percent over the same period. The 11-company S&P Supercomposite Life & Health Insurance Index has fallen 62 percent. âInsurers have been prevented from accessing the debt markets for additional liquidity,â S&P said. North American insurers posted more than $190 billion of writedowns and unrealized losses tied to the collapse of the housing market since the beginning of 2007. The industry lost $32 billion in surplus last year, according to Moodyâs Investors Service. This year, carriers including New York-based MetLife, Prudential and Hartford Financial Services Group Inc. have been buffeted by ratings downgrades. MetLife Losses MetLifeâs unrealized losses on corporate debt surged 71 percent to $14 billion in the last three months of 2008 as the recession hurt firmsâ ability to repay or refinance their bonds. Corporate defaults are poised for a âsignificantâ increase this year and may end up costing life insurers more than losses on securities linked to subprime, Alt-A and commercial mortgages, according to Barclays Plc. Christopher Breslin, a spokesman for MetLife, had no immediate comment on the report. MetLife said on April 13 its capital position was âstrongâ and the company wonât seek aid from the governmentâs Troubled Asset Relief Program. Prudential posted a net loss of $1.57 billion in the fourth quarter amid investment declines and costs to prop up minimum- return guarantees on slumping retirement products called variable annuities. Bob DeFillippo, a spokesman for the Newark, New Jersey-based insurer, had no immediate comment.