What You Need to Know
- In: Individual and employer-sponsored retirement arrangements of all kinds.
- In: Fixed income annuities, guaranteed universal life policies and whole life policies.
- Out: Having an easy time controlling administrative expenses.
Soft spring economic sunlight made many life insurance and annuity products look beautiful — but too much summer heat could hurt.
Laura Bazer and other analysts at Moody’s Investors Service assessed sales and financial trends in the U.S. life, health and annuity sector Thursday, in a new sector review.
Although a future combination of high inflation and a recession or a big, sudden, 3-percentage-point spike in long-term bond yields could burn some life insurers to a crisp, the current combination of modest rate increases and wage inflation is buoying sales growth, the analysts write.
What It Means
Life insurers are offering your clients more attractive life and annuity deals, and many clients are responding to those offers.
You need to track life insurers’ financial strength closely to understand how economic risk is affecting the value of the benefits guarantees embedded in the life and annuity products that clients are adding to their portfolios.
Moody’s is not just any old company with an opinion. It’s one of the world’s major bond and insurance rating organizations.
Its views affect whether companies and other organizations can borrow money, whether insurers have the financial strength to offer insurance, what interest rates borrowers pay to borrow money, and how much insurers can charge for products such as fixed annuities.
The new report does not affect the ratings Moody’s has provided for any life insurer, but it reflects how the firm sees U.S. issuers’ operating environment.