Despite the current rate environment, S&P Global Ratings is maintaining a stable outlook on the U.S. life insurance industry for 2020.
Analysts believe insurers are adept at managing headwinds and are supported by robust capitalisation and liquidity.
Likewise, the prominence of block sale transactions and the rising popularity of adding macro hedges on top of dynamic hedges should better protect financial strength in times of stress, although these strategies vary widely by insurer.
Just over 90% of S&P’s rated life insurers currently have stable outlooks, which indicates the low likelihood of negative rating changes in the next 12 months.
Beyond 2020, S&P analysts expect life insurers will be busy navigating through a mixed bag of old and new risks.
Besides macroeconomic headwinds, major regulatory changes, accounting changes, and mergers and acquisitions (M&A) are likely to affect industry dynamics.
Analysts note that the industry is going long on longevity, which presents a new set of opportunities and challenges.
Lastly, investment in technology can be a game changer if the industry see’s breakthrough advances.
