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Life insurance industry likely to hold steady this year

Life Insurance and Annuities
by Bob Thomas and Gary Rose
Few young adults poised to buy life insurance?
Few young adults poised to buy life insurance?

While the life insurance and annuities industry has taken a bit of a hit since the start of the recession, there may be good news on the horizon for insurers.

According to the U.S. Life and Annuity 2013 Outlook from A.M. Best, the life insurance and annuities industry will likely remain stable for this year despite some experts' concerns about a few economic factors, such as low interest rates. This projection was based on the fact that many companies operating in that field have "generally strong capital positions" as well as a number of other important factors, such as more recent efforts by those issuers to improve their balance sheets by continued advances in their approach to risk management, and attempts to reduce risk overall.

Further, many of those efforts are already paying off for insurance companies in general, the report said. Through the end of November 2012, 93 percent of life or health insurance companies had stable ratings forecasts, up from just 75 percent of them who could have said the same at the end of 2010.

However, at the same time, the A.M. Best report also cautioned that if interest rates don't start rising in the relatively near future, that the outlook for these companies would likely begin to deteriorate. Interest rate issues have been a major weight on companies that were slow in lowering product guarantees. Low interest rates will further cut into growth for other companies, but companies with more diverse earnings sources are likely to more easily weather the storm.

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