Life insurance industry on firm footing, new data indicates
Even in an economic downturn, life insurance was profitable
An impending report from research firm Conning Research and Consulting suggests that life insurance companies were profitable in 2009, despite losses associated with the financial crisis.
The insurance industry as a whole is projected to have $16 billion in net income this year, offset by $20 billion in capital losses. Fully $8 billion of the $16 billion profit comes from life insurance, which has been stable even as the financial industry floundered.
And the chief economist of a major Swiss reinsurance company, Thomas Hess, suggested that “insurance and reinsurance functioned routinely throughout the crisis.” Reinsurance companies assume the riskiest parts of insurance firms’ portfolios and are uniquely susceptible to financial downturns and other disasters.
Hess also suggested that global gross domestic product should resume normal growth trends in 2011. He projected that developed nations’ GDP will rise 2.5 percent and emerging markets’ GDP will increase 6 percent, providing new avenues of opportunity for insurance firms.
Conning Research analyst Terence Martin noted that “life insurance products … have been remarkably stable during the crisis.”
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Posted: December 1, 2009
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