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Sep 2021

Life insurance sector's outlook upgraded to stable

Source: Middle East Insurance Review | Jul 2021

Moody’s Investors Service said that it has changed the outlook for the global life insurance sector to stable from negative for 2021.
 
The change in outlook mirrors a recent shift in outlook to stable from negative for life insurers in the US and Japan, two of the world’s largest life insurance markets, said Moody’s. It also reflects the sector’s improved growth prospects and reduced likelihood of tail events in the near term, as a result of a more favourable global operating environment, aided by improving individual health as mass vaccinations reduce COVID-19’s spread.
 
Despite sustained low interest rates, Moody’s expects the life insurance sector to remain stable over the next 18 months. Countries with a negative outlook such as the UK have had signs of stability, both in the operating environment and at the individual company level, as shown by solid profitability and solvency ratios. In other countries with negative outlooks, such as Germany and the Netherlands, life insurers are faced with structural pressure on profitability and capital adequacy linked to very low yields.
 
The factors that underscore the change in outlook to stable from negative include a rebound in the global economy that will support industry growth, solid capital adequacy which has helped insurers navigate the pandemic, M&A in leading business transformation and preparing insurers for post-COVID-19 and accelerating digitisation. M 
 
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