Operating earnings for midsize, diversified US life insurers in 2021 experienced continued unfavourable impacts, largely due to the pandemic and the resulting above average levels of mortality and morbidity.
Another key driver was low interest rates. Relative to historical performance, impacts from the pandemic were manageable, and in the case of American National, these were offset somewhat by earnings in the property/casualty segment.
Symmetry Financial Group’s 2021 statutory pre-tax gain increase was mainly due to strong sales and account value growth, along with outsized investment performance, driven by favourable market conditions.
Financial performance and earnings in 2022 are expected to improve as pandemic-related mortality subsides. However, macro volatility (high inflation, the conflict in Ukraine, general supply and labour shortages) could affect results, although the insurers in this classification generally have below average exposure to risky assets.
Fitch says midsize life insurers maintained strong capital and asset quality levels that are generally in line with expectations for companies with a “A” Insurer Financial Strength rating.
Fitch’s concerns regarding UNM’s legacy long-term care insurance exposure are partially offset by strong asset adequacy results supported by strong reserve margins in other lines of business and very strong holding company cash.
