Despite the rapidly descending darkness as the days grow shorter and the year winds to a close, there's growing light ahead for U.S. life insurers. Based on the Q3 results of publicly traded U.S. life insurers, which confirm a general improvement for the industry, Moody's Investors Service has declared a stable outlook for the sector.
In its report, "U.S. Life Insurers' Q3'10 Earnings -- Key Take-Aways," Moody's declares that life insurance sales continued to pick up both on a quarterly and yearly basis, and regained some of the ground lost in early 2009. However, the agency noted that fixed annuity sales continued to stagnate on the back of low interest rates, and there was only small increases variable annuity gross sales.
"Aggregate net income and operating earnings were stronger compared with quarterly results in the first half of 2010, and were substantially more favorable than 3Q09 results," says VP-Senior Credit Officer Ann Perry. "Quarterly operating earnings strengthened year over year, although a few individual companies struggled to improve their core results."
The report also notes that investment losses continued to moderate in Q3, and dramatically declined when compared to the same period in 2009. Moody's also wasn't shocked by lingering concerns about losses in non-agency RMBS securities and commercial real estate-related investments.
"Lower investment losses and slowly increasing operating earnings should help life companies to generate internal capital," Perry says, adding that life insurers' ability to generate internal capital, coupled with increased access to external capital in the debt and equity markets, also is indicative of the industry's gradually improving vitality.
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Corrected November 18, 2010 at 1:50PM: yes