Three weeks ago, I highlighted the trouble in the insurance industry. The reason? Insurance companies get premiums and they invest them until it's time to pay a claim. It's a great business if the insurers can pick good investments. Regrettably, many insurers own more mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) than they have capital. So as they write down this toxic waste, the decline in their capital puts them at risk.

This comes to mind in considering the earnings of three insurers: Met Life (NYSE: MET), Prudential Financial (NYSE: PRU), and Aetna (NYSE: AET). Each of them have or will take a hit from lousy investments, here's how:

• MetLife expects its third-quarter operating earnings to range between $600 million and $675 million, or 83 cents to 93 cents per share; analysts expect it to make 88 cents when it reports later today. It could take charges between $1 billion and $6 billion on its asset portfolio, which could wipe out the majority of its $7 billion in excess reserves.
• Prudential expects after-tax adjusted operating income for its financial services businesses to be in the range of $275 million to $375 million or $0.67 to $0.90 per share when it reports today, below the $1.72 a share analysts expected. And it is forecasting pre-tax charges of $115 million or $0.21 per share relating to investment results from fixed income and equity investment funds and $325 million to $375 million in impairment charges on holdings of securities issued by the now bankrupt companies like Lehman Brothers.
• Aetna missed by a mile. It reported profit of $277.3 million, or 58 cents a share, compared with $496.7 million, or 95 cents last year; analysts expected it to earn $1.12 a share. A big reason for the miss was a capital-markets hit of 48 cents due to bad investments.