Global life insurance outlook revised to stable amid brightening growth prospects

Written by Adam Cadle

15/06/2021

Moody’s Investors Service has changed its 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. It also reflects the sector’s improved growth prospects and reduced likelihood of tail events in the near term, as a result of more favourable global operating environment.

“Strong solvency capital ratios globally underpin our view of the outlook,” Moody’s Vice President Manoj Jethani has said.

“Although pandemic mortality continues to weaken profitability, the overall impact on the credit profile of life insurers has been less severe than originally expected due to differences in demographics of the general versus the insured population, as well the benefits of diversification from longevity-type insurance products.”

Of the remaining countries where there is still have a negative outlook, in some, such
as the UK, there have been 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 still very low
yields.

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