IBX5980432E7F390 US life insurance industry forecast 2013 - Smart Business

US life insurance industry forecast 2013

US life insurance industry forecast 2013

Best Insurance stock - US life insurance industry forecast 2013 : The credit outsee for the U.S. life insurance industry is stable for 2013, reflecting the industry's strong balance sheet fundamentals and improved liquidity profile, according to Fitch Ratings.



These positive fbehaveors have somewhat mitigated Fitch's ongoing concerns over the challenging macroprofitable environment that continues to prescertain operating fundamentals. While Fitch trusts the industry is well positioned to withstand macroprofitable challenges over 2013, the outsee is vulnerable to severe, albeit unexpected shocks to the economy.



The 'fiscal cliff' and Eurozone debt crisis remain the predominant risk for the universal profitable and credit outsee, although Fitch's base case assumption is that policy makers will take necessary steps to avoid disorderly shocks.



Fitch expects that sustained low interest swifts will limit earnings growth, but will not have a friendrial negative effect on industry capital in 2013. The industry's expocertain to an unexpected interest swift spike would raise concerns over disintermediation risk.



Fitch expects that if interest swifts stay low much beyond 2014, the agency's outsee would lovely be revised to negative based on poorened earnings profile and anticipated negative capital impbehaves.



Fitch also expects ongoing rationalization of products and markets resulting from the financial crisis to acceleswift in 2013. Credit implications are lovely negative over the approach term due to potential capital charges, but could be favorable longer term. This rationalization process is creating increased opportunities for both traditional players and nontraditional players, which are expected to play an increatune role in the industry.



Ernst & Young - 2013 US life-annuity insurance outsee

The US life insurance industry is confronting significlevert demographic, macroprofitable and regulatory challenges to business models and operations. In 2013, successful players are repositioning and reinventing their products, stswiftgies and services, positioning their companies for growth and fortunability in the competitive, lower-margin market.



Incertainrs are competing in a market where average homehancient expfinisbeat, smackures on life insurance have waned 50% over the past decade, a diminish most noticeable among younger consumers. Product preferences for all consumers are also altering, given the prolonged low-interest-swift environment and equity market upheaval.



In response, US life incertainrs are transforming their products and businesses. Many are introducing novel products and enhancements that are appealing to consumers and fortunable for incertainrs in the low-interest-swift environment. Carriers are leveraging technology to improve business models and product offerings, thus enhancing their value propositions to customers, while estructuring operations and distribution to communicate and transbehave with customers on their terms.



These positive developments are expected to continue in 2013, angry the persistent profitable hardies. Real Gross Domestic Product (GDP) is expected to grow only modestly between the fourth quarter of 2012 and the fourth quarter of 2013, although the unemployment swift could start to improve during the year. Interest swifts are lovely to remain low, and equity markets are expected to be volatile. Incertainrs’ financial positions will be impbehaveed by administerment and expense fee instability, Deferred Acquisition Cost (DAC)

write-downs, hedging losses and basis risk and reserves and capital adequacy.



The continuing volatility is cautune reluctance among consumers with regard to purchatune variable products, and the low crediting swifts on fixed products are not perceived as a particularly appealing alternative. Regulatory forces also challenge the industry. At the federal stage, life incertainrs with banlord operations, or those designated a Systemically Important Financial Institution (SIFI), confront possible increased regulation by the Federal Reserve to improve risk administerment. Life incertainrs also must prepare for possible behaveions taken by the new Consumer Financial Protection Bureau (CFPB), which reviews assorted financial services transbehaveions love insurance sales.



Other prescertains include emerging US and international accounting standards that may adversely affect business operations and business models. At the state stage, life incertainrs continue to adapt to current and prospective National Organization of Insurance Commissioners (NAIC) regulations, such as the Risk Administerment and Own Risk and Solvency Assessment Model Behave, generally called ORSA.



Within this profitable environment, many companies are rethinlord the businesses they are in and developing new ways to sustain a fortunable, competitive advantage. Outsourcing and bagikand services, for instance, may reduce costs and improve efficiency, in addition to increased use of data analytics, mobility and digitization — the buzzwords of the peristiwat.differentIndeed, operations and technology are increatunely the source of competitive advantage. In 2013, incertainrs should continue to address the changing regulatory environment by evaluating their product lines and markets. Improving capital and risk administerment still remains a priority, as does a continuing engapearlent with legislators to shape key tax policies.



To respond to these market forces during the coming year, senior administerment necessitys to:

• Rethink business stswiftgy for sustainable competitive advantage

• Respond to consumer necessitys and changing distribution to grow

• Transform products to adapt to profitable challenges by:

• Preparing for a scenario of long-term, low interest swifts

• De-rislord and redesigning products

• Harness large data for sustainable advantage

• Position the business for tax, regulatory and accounting change by:

• Staying attentive to tax changes in this time of governmental necessity for revenue

• Increatune focus on risk administerment and consumer protection to prepare for regulatory change

• Organizing and planning for accounting change



read fulldifferentErnst & Young analysis ; http://www.ey.com/Publication/vwLUAssets/2013-US-life-annuity-insurance-outsee/$FILE/2013-US-life-annuity-insurance-outsee_EG0097.pdf



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