US life insurers’
results in Q4 of 2011 continued to reflect a tough environment,
says Ann Perry, a vice-president at Moody’s Investor
services.
“The sluggish economy,
high equity market volatility and low interest rates continued to
constrain life insurers’ earnings in 2011,” says Perry.
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She notes that US life
insurers overall reported modest improvements in operating profit
and net income in 2011 but that in the fourth quarter net income
came in slightly lower than in the same period in 2010.
On a positive note,
Perry says credit impairments across the life industry fell from
$5.5bn in 2010 to $5.2bn in 2011.
Excluding Aflac, which
incurred a significant impairments related to its investment
portfolio, industry impairments as a percentage of cash and
invested assets declined further, to 17 basis points from 29 basis
points in 2010.
She adds that life
insurers’ impairments on their European investments are expected to
be modest, given their limited exposure to troubled banks and
sovereign debt.
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