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Troubles in the U.S. auto industry helped drag down share prices of U.S. life insurers Friday, as investors consider potential insurer investment exposure to the industry, and to economic shock waves should the industry's troubles worsen.

Life insurers generally have taken bigger losses than property insurers from investments in troubled sectors as the economy falters. Exposure to auto makers struggling for survival could add a new source of pain, though an insurance industry analyst said the worst may already be over for most.

"GM and Ford share prices have been going down for a long period of time, to the extent that the depressed value of stock has already been reflected" for many insurers, said Robert Hartwig, president of the Insurance Information Institute, an industry trade group.

The Dow Jones Life Insurance Index fell 8.6% in recent trading, leading all insurance segments, which were generally down Friday on bad news from Detroit.

Auto makers General Motors Corp. (GM) and Chrysler LLC failed Thursday in their bid to win a $14 billion government loan. Both have said they may not make it to the end of the year without government help. Ford Motor Co. (F) says it is sound, but would be hurt by the collapse of the other two.

The White House has said it is considering using money from the Troubled Asset Relief Program, or TARP, to prevent a collapse of the car makers. However, a White House representative said any steps wold be intended to stop an immediate failure, and stakeholders in the auto industry would need to make concessions for the companies to become viable.

Although some insurers put out statements of their exposure to failing financial-services companies such as Lehman Brothers and Washington Mutual when those companies were in the news, there has been little comment on their exposure to the big three Detroit auto makers as two of them consider filing for bankruptcy protection Friday.

Life insurers typically hold more of their investments in fixed-income securities such as bonds than other types of insurers, so several took big losses from the failure of financial services companies, said A.M. Best & Co. analyst Andrew Edelsberg in an interview Friday.

"Insurers happen to have a preponderance of exposure to financial services companies because they issue fixed income," Edelsberg said. "But for auto makers, I don't believe insurance companies have any more exposure than any other industry that buys fixed-income securities."

At recent investor calls some big life insurers held in the past week, some focused on their exposure to the commercial mortgage market, as fears grow over rising defaults.

During an investor call last week, Greg McGreevey, Hartford Financial Services Group's (HIG) chief investment officer, said the company had been "winding down" its exposure to U.S. auto manufacturers in the last six months, and has $46 million remaining total exposure, and no exposure to GM or Chrysler. He didn't say how much Hartford had lost on its auto maker investments.

Hartford has a total of $50 million in exposure to auto suppliers.

"We're looking, as everybody else is, at the impact potentially that the auto sector can have in other parts of the marketplace, both in commercial real estate and unemployment and a variety of other things," McGreevey said. But in terms of the direct impact to autos, we feel very comfortable with the decisions that we've made."

Genworth Financial (GNW) spokesman Thomas Topinka said that Genworth has no direct exposure to GM, Ford or Chrysler, and has bond exposure of less than $25 million to GMAC and Ford Motor Credit financing arms.

A spokesman for MetLife Inc. (MET) said the company hasn't made any announcements about what its auto-maker holdings may be.

Insurers could also take a hit to their premiums if a big firm goes under. Hartwig said that although insurance would continue on property coverage, premiums for workers compensation are based on the number of employees, and are generally falling.

Among big life insurers, shares in Prudential Financial Inc. (PRU) and Hartford led the way down for much of the day, with shares of Prudential off 6.6% recently, and Hartford down 7.4%.

- By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com

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