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Life insurance outlook once again stablePosted On Tue, May 25, 2010
The insurance industry has moved its outlook from negative to stable, according to Moody's Industry Report.
As the economy begins to stabilize, so does the life insurance business, Moody's Investors Service said. Trends signaling the upswing of the market include higher stock prices, improved employment numbers, and more consumer spending. Life insurers are expected to soon see an improvement in net profits along with operating and investment incomes.
Laura Bazer, Moody's vice president and senior credit officer, said that "although we expect the economic recovery to remain sluggish and vulnerable to global market disturbances, we believe that the underlying trends indicate stability for the financial prospects and credit profile of the U.S. life insurers over the medium-term. U.S. life insurers are simply in a much better position now than they were a year ago to weather a second downturn, should one occur."
A possible area for concern is higher asset losses, particularly in real estate, Moody's said. It's also a worry that VA liabilities will remain vulnerable and volatile.
Beginning in July, the Department of Veterans Affairs will lower premium rates for those enrolled in the Family SGLI program. This is the third reduction since the program began.
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