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Life Health > Life Insurance

Fitch%3A Product Guarantees Hurt Outlook

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Low interest rates are still causing headaches for U.S. life insurers.[@@]

Analysts in the Chicago office of Fitch Ratings have given that assessment in their 2007 U.S. insurance industry outlook review.

Low rates are holding down U.S. life insurance company portfolio returns, the Fitch analysts observe.

Meanwhile, life insurers are facing stiff price competition along with pressure to offer ever-more generous product guarantees, the Fitch analysts say.

Life insurers are having a hard time increasing returns by accepting more risk of default, because the shakier borrowers are paying rates that are close to the rates paid by the stronger borrowers, the analysts report.

Over in the health insurance sector, commercial price competition has eased, investment yields are up slightly, and carriers appear to be doing a better job at controlling administrative costs, the Fitch analysts say.


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