AM Best Maintains Negative Outlook for Life Sector

Life and annuity issuers depend heavily on investments in bonds. The stock market has remained relatively stable, but many say interest rates will stay "lower for even longer." AM Best  says it's concerned about what low interest rates and the COVID-driven economic downturn could do to life and annuity issuers' income statements and balance sheets in the future.

Other factors supporting a negative outlook include sales challenges, the possibility that the number of asset impairments could grow, and the likelihood that lower interest rates will force insurers to increase reserves, AM Best says.

Efforts over the last 12 years to strengthen enterprise risk management (ERM) frameworks have gone largely untested, until now, AM Best says.

Early indications are that the ERM measures have been effective at helping life and annuity issuers measure capital and liquidity levels, the rating agency says.

— Read Interest Rate Assumption Changes Could Be the New Monster, on ThinkAdvisor.

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