Conning Research: Long-Term Expense Control Is Key

“In analyzing individual life companies, we identified the low-cost companies and reviewed their approach to expense management,” says Stephan Christiansen, director of research at Conning. “Our analysis indicates that scale appears to matter less than management may believe. Instead of trying to grow out of their inefficiencies, insurers that outperform use a rigorous and consistent approach to expense analysis and control to ensure long-term profitability.”

Terence Martin, an analyst at Conning Research & Consulting, adds: “Life insurer profitability has been squeezed by declining premiums and low investment yields. Of course, in this environment, expense analysis and control are of paramount importance to senior management. Yet our analysis indicates that those insurers who focus on expense management consistently through up and down markets are the consistent high performers.”