AM Best is maintaining a negative market segment outlook on the U.S. life and annuity insurance markets for 2021, based mainly on the economic and financial market uncertainty created by the COVID-19 pandemic.
Although the pandemic has increased mortality, the increase in the number of death claims has had only a limited impact on overall capitalization, the rating agency says in a market segment report.
The impact of pandemic-related mortality on specific companies has varied, due partly to differences in product mix and market focus, AM Best says.
Life and annuity issuers depend heavily on investments in bonds. The stock market has remained relatively stable, but many say interest rates will stay “lower for even longer.” AM Best says it’s concerned about what low interest rates and the COVID-driven economic downturn could do to life and annuity issuers’ income statements and balance sheets in the future.