(Reuters) - U.S. life insurers are expected to report messy fourth-quarter results starting next week, with their massive investment portfolios getting hit by tumultuous markets.

FILE PHOTO - A computer screen showing stock graphs is reflected on glasses in this illustration photo taken in Bordeaux, France, March 30, 2016. REUTERS/Regis Duvignau

The market mayhem has already prompted analysts to knock down earnings estimates for major life insurers including Ameriprise Financial Inc, Lincoln National Corp and Prudential Financial Inc, since late October.

Analysts have lowered Prudential’s mean earnings-per-share estimate from $2.98 to $2.81, Lincoln National Corp from $2.24 to $2.12, and Ameriprise from $3.85 to $3.66, according to I/B/E/S Refinitiv.

“Even though these are annuity or retirement businesses, they are businesses that are driven by the assets they manage,” said Sandler O’Neill analyst John Barnidge.

Life insurers make money by investing premiums they receive for coverage, hoping to earn more than what they pay in claims, and also investing lump sums consumers hand over when buying annuities.

But during the fourth quarter, stock and bond markets went into a spiral.

The S&P 500 index fell 13.7 percent during the final three months of 2018, marking the worst performance for stocks in more than seven years. Global indices also felt the pain. For example, the MSCI All-World Index fell 13 percent, its worst quarterly performance since the 2011 third quarter.

Life insurers have amped up risk taking in recent years, moving away from safer investments like Treasury bonds, as interest rates remained near rock-bottom levels.

But during the fourth quarter investors sharply retreated from such investments, globally. Investment-grade and high-yield corporate bonds lost the most value in single quarter relative to Treasury notes in more than seven years, according to ICE Bank of America/Merrill Lynch fixed income index data.

“It’s kind of the double whammy - you saw interest rates going down and the S&P going down. Both will have an impact here,” said Elyse Greenspan, a Wells Fargo Securities LLC analyst.

Other big financial companies whose earnings are highly exposed markets — including banks, hedge fund firms and big asset managers — also found the fourth quarter challenging.

On Jan. 16, BlackRock Inc, the world’s largest fund manager, reported a smaller-than-expected quarterly profit on Wednesday due to financial market turmoil. BlackRock’s stock is down nearly a third from an all-time high near $600 per share last year, declining more than 21 percent in 2018.

“It should be a messier quarter for the group ... but we believe most of the focus will be the 2019 outlooks,” Greenspan said in a Jan. 18 note.

Despite the challenges, analysts pointed to positive signs in underlying life insurance businesses. For instance, strong sales of fixed annuities, for which consumers give a cash lump sum to an insurance company, guaranteeing they will not lose their principal while paying a fixed interest rate.

“People are more likely to buy a fixed annuity when markets are volatile,” Barnidge said.