Since the financial crisis of 2008-2009, U.S. life insurers have boosted their capital positions, but face new challenges, new research reveals.
Goldman Sachs Asset Management, a unit of The Goldman Sachs Group Inc., New York, published this finding in a new white paper, “Returning Versus Investing Excess Capital: Looking Beyond Share Buybacks.”
The white paper shows that life insurers’ risk-based capital (RBC) ratios now average near 450%, up from 400% before the 2007-2009 financial crisis.
The report notes, however, that continuing low interest rates continue to depress life insurers’ earnings, return on equity and share price performance. The report also observes that “accumulated earnings are resulting in capital generation in excess of current capital needs.”