- How does the economy impact life insurance coverage sales?
- May 18, 2010
Strengthened employment rates and consumer spending are among the factors that could contribute to increased life insurance coverage sales, while variable-annuity and asset-based businesses have improved along with elevated stock prices. These factors should contribute to stronger capital, according to the report, boosting companies from negative to stable outlooks.
Laura Bazer, vice president and senior credit officer for Moody’s, says the industry is in a better position to weather a second economic downturn, should it occur.
“Although we expect the economic recovery to remain sluggish and vulnerable to global market disturbances, we believe that the underlying trends indicate stability for the financial prospects and credit profile of the U.S. life insurers over the medium-term,” she says.
The real estate market’s struggles are likely to continue hurting the life insurance industry, according to Moody’s. Variable annuities’ vulnerability to market downturns could also expose life insurers to risk. These annuities grow – or shrink – in response to the fund they are invested in, while fixed annuities reflect the stability of their insurance company.
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