Moody's forecasts that life insurers around the world will see limited growth possibilities in 2021.
The rating firm’s analysts have issued the segment a negative outlook for the coming year. The fragile economic recovery and interest rates wallowing at extreme lows are to blame, they say.
“High unemployment will limit global insurance demand amid coronavirus uncertainty," says Moody's vice president Laura Bazer. "However, the sector is evolving with the acceleration of the digital transformation and M&A is furthering the business evolution of the life insurance sector. Particularly in North America, the abundance of capital has been facilitating transfers of business.”
Canada spared
Moody's also provided a country-by-country snapshot of the life insurance industry's growth prospects in 2021. Canada is one of the few countries with a stable outlook. The others are China and Brazil.
The United States, Japan, the United Kingdom, France, Italy, South Korea and Germany received a negative outlook. No country was given a positive outlook.
The reinsurance picture
In tandem with life insurers, life reinsurers also have a negative outlook for 2021. For reinsurers, low profitability and uncertainties related to the coronavirus led the Moody's analysts to reach that conclusion.
“Profitability has struggled," Moody's Vice President James Eck says. "Although there have been gains on the pricing side over the past couple of years, property catastrophe reinsurance pricing, a key driver of reinsurers’ overall profitability, remains roughly 15% below 2012 levels.”
