Restructuring the U.S. Life Insurance Sector Involves Risk: Moody's Analysts

Unemployment is falling, gross domestic product appears to be growing, and the easing of restrictions on face-to-face meetings should help insurers increase sales, the analysts add.

Private Equity Impact

For life insurers, pandemic-related claims and investment losses have been lower than feared. But the analysts suggest that some of the private equity firms behind many life and annuity deals tend to choose riskier investments than traditional life insurers choose.

Life insurers' efforts to reduce risk, by shifting toward fee-based products and services, such as asset management, and away from providing guaranteed, interest-sensitive insurance products, could also add risk, the analysts say.

"The paths of individual insurers' strategic transformation, which may involve strategic review of their entire operations, are disruptive, adding uncertainty to their future business and credit profiles," the analysts write.

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