|[December 18, 2013]
Fitch: Stable Outlook for U.S. Life Insurers in 2014
CHICAGO --(Business Wire)--
The rating outlook for the U.S. life insurance industry is stable for
2014, according to Fitch Ratings. In addition, the fundamental sector
outlook is stable. Fitch's outlook considers the industry's strong
balance sheet fundamentals and liability profile, and improved operating
These positive factors have somewhat mitigated Fitch's ongoing concerns
over the challenging macroeconomic environment that continues to
pressure operating fundamentals. While Fitch believes the industry is
well positioned to withstand macroeconomic challenges over 2014, the
outlook is vulnerable to severe, albeit unexpected shocks to the economy.
Reported statutory capitalization exceeds both pre-crisis levels and
rating expectations, driven by retained earnings and other capital
management initiatives. Fitch views the industry's liquidity profile at
the operating company level as strong, driven by improved investment
valuations and capital market liquidity. Moreover, insurance holding
company liquidity remains very strong relative to historical levels and
Better than expected earnings performance in 2013 benefited from
improved financial markets, namely favorable equity market performance
and relatively benign credit market conditions. The earnings impact
associated with the uptick in interest rates in 2013 was fairly limited.
Fitch expects modest earnings improvement in 2014 under our base case
While the uptick in interest rates in 2013 has provided some relief,
Fitch expects historicaly low interest rates will continue to pressure
industry operating and balance sheet fundamentals, and cause life
insurers to further rationalize their participation in
interest-sensitive insurance product lines in 2014.
The full '2014 Outlook: U.S. Life Insurance' is available at 'www.fitchratings.com'
or by clicking the link below.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2014 Outlook: U.S. Life
Insurance (Improved Credit Fundamentals)
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