Despite pressures, the U.S. life insurance industry is maintaining a stable outlook in 2005, according to an analysis by Standard & Poor’s Ratings Services, New York.[@@]
S&P credits prudent risk management by life insurance companies for keeping a number of challenges at bay.
Still, this could be a transitional year for the industry, according to the report, “U.S. Life Insurance Mid-Year 2005 Outlook: Managing Risk Prudently Preserves Stable Sector Ratings Outlook.”
The industry remains well capitalized ==perhaps better than before the most recent downturn == with healthy earnings and revenue potential, S&P says. But although corporate bond defaults remain low, that could begin to change next year, it warns.
Thanks to favorable demographic trends, the industry’s sales prospects remain strong. Due to intense price competition, individual life sales are likely to grow in the high single digits in 2005, moderating to the low- to mid-single digits later.