insurance companies -- have escaped the nosedive in US stocks unscathed. A few have even scored big gains from well-timed forays into the equity market.

"We've not been hurt by the downturn in the markets over the last year or two, in terms of our investment income,'' Anthony Williamson, senior vice president of investments at MetLife Inc., told Reuters. MetLife is the US's top life insurer, with about $140 billion in invested assets.

Most insurers tell a similar story.

Life and property insurance firms, which together hold more than $4 trillion in investments -- about 11 percent of all invested assets in the US, at the last count -- usually hold only two to four percent of their own portfolios in stocks.

They are not likely to increase that allocation greatly in the near future, preferring to buy riskier bonds than they usually would purchase rather than stocks in their efforts to boost investment returns.

"They (insurers) may be starting to reach for higher yields,'' said Mark Puccia, who monitors insurers' investment portfolios for rating agency Standard & Poor's (S&P). "But not on the equities side of things.'' Insurers get steady returns of about six to eight percent on their massive portfolios, which are usually 70-90 percent safe and reliable fixed-income investments -- mostly government, corporate and mortgage-backed bonds.

"When you manage assets for the general account of an insurance company, you are managing mainly for the income of the company, and to match the liabilities, rather than to beat the market,'' said MetLife's Williamson.

Insurers' investment returns may sound paltry to more nimble investors used to double-digit returns on stocks in the 1990s. But they look like big winners over the last 12 months as the Nasdaq has dropped 57 percent and the Standard & Poor's 500 index is down 19 percent.

"The area we've been hurt the most in the year 2000 is in triple Bs (corporate bonds),'' said Williamson, who said MetLife owns slightly more equities than most of its rivals.

"But our low exposure (to stocks) is really not because of a wonderful call on our part, as much as it is that public stocks really don't fit very well for insurance companies''.

Despite insurers' traditional aversion to the volatile stock market, some have scored big wins there in the past two years, as much through good fortune as by planning.

CNA Financial Corp., the Chicago-based business insurer controlled by Loews Corp., and New York life insurer MONY Group Inc. both cashed in on stocks last year.

CNA reaped a whopping $860 million in after-tax realised investment gains in 2000 -- 72 percent of its total net income for the year -- as it sold off holdings in telecommunications network builder Bermuda-registered Global Crossing Ltd. and British property firm Canary Wharf Group Plc.

CNA acquired stock in Global Crossing as part of an early financing deal with the firm before its 1998 stock offering. CNA started to cash in when Global Crossing shares hovered above $50 early last year. By the end of last year the stock had plunged, along with other telecommunications firms, to below $12.

"That was just one of those fantastic investments that was basically made on a relatively small investment,'' said Arthur Rebell, chief investment officer of Loews, which manages CNA's assets. "It wasn't part of a large programme to invest in a lot of telecom stocks.'' The vast bulk of Loews' and CNA's $35 billion-or-so portfolio is in bonds, Rebell said, but the firm is looking to invest more in stocks now that the markets have tumbled.

"Starting in the middle of last year, we began a programme of getting more into equities, because of our feeling that there was such great value for the first time in several years.'' Another big winner was MONY Group, which pulled in $219.5 million in pretax operating profits last year from investments in venture capital funds managed by third parties.

These investments accounted for less than three percent of MONY Group's total portfolio, but made up more than half of the life insurer's pretax profit, excluding one-time items, in 2000.

Insurers are not entirely immune to stock market woes, however.

US life insurers own over $1 trillion in stocks which support variable life insurance and annuity policies -- which are essentially mutual funds with tax advantages.

About 80 percent of funds collected from selling variable products are invested in stocks -- although in this case it is the customers that take the hit when markets drop rather than the insurance companies.

However, should stock markets keep sliding, some insurers would be at risk.

Merrill Lynch life insurance analyst Edward Spehar this week cut earnings estimates slightly for Nationwide Financial Services Inc., Hartford Financial Services Group Inc. and Lincoln National Corp. because variable life insurance and annuity sales inevitably wither when stock market returns are bad.

So far, though, most insurers have escaped the effect of a falling stock market that has hit investments and businesses of fellow financial firms like banks and brokers.

"If your whole portfolio only has two percent stocks in it, even if that two percent went to zero, you would not have a major impact on investment (income) earned,'' said George McKeon, analyst at research firm Conning & Co.