ICELAND - Profits at Icelandic life insurance companies fell more than ISK 200m to ISK1.3bn (€10.1m) in 2007 and the total assets of the sector now stand at just ISK13.8bn, figures from the Icelandic Financial Supervisory Authority (FME) have revealed.

Overall, the Icelandic insurance industry returned a profit after tax of ISK 3.5bn in 2007, compared with ISK19.5bn in 2006.

At least 70% of this profit was the result of financial activities, although the FME highlighted this element had also fallen by around ISK8bn from the previous year to approximately ISK9.5bn.

Overall pre-tax profit in the industry resulting from life insurance activities increased from ISK1.3bn to ISK1.4bn at 2007 price levels, although the profit of life insurance companies fell from ISK1.53bn to ISK1.31bn.

In addition, figures from the supervisory authority showed the total value of assets held by the life insurance companies  - which are all owned by non-life companies or other financial services companies - dropped from ISK 15.5bn to ISK 13.8bn in the last year.

Figures from the technical profit and loss account for the industry's life insurance companies revealed investment income of around ISK 938m from life assurance business, while the sector paid out benefits of approximately ISK 1.1bn.

In addition, the figures showed life insurance companies wrote almost ISK3bn in premiums in 2007, although a change in the life assurance reserve cost the sector ISK5.7m.

The Icelandic financial services industry has been under severe pressure over the last year as trading in the Icelandic currency by hedge funds and other players has drastically reduced the value of major firms in the Icelandic market, while the stock market also fell by more than 50% between July 2007 and March 2008.

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