The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
As of February 2012, the major US insurers have yet to report formally on their performance during calendar 2011. When they do so, their comments will likely have an upbeat tone. Both the non-life and the life segments have responded well to enormous challenges over the last 12 months. There are several reasons to believe that the overall profitability of the worlds largest national insurance market will improve significantly.
For property/casualty insurers, a sub-set of what we define as the non-life segment (because we include the accident/health business that is handled by the life companies), the major challenge over the last year has been a wave of insured losses arising from natural catastrophes in the US and elsewhere. By most metrics, 2011 was a bad year for catastrophe-related claims in the US (quite apart from losses associated with the Great East Japan Earthquake and other disasters overseas); by some measures, it was the worst ever. Meanwhile, a general lack of confidence on the part of businesses and households has restrained growth in premiums. Looking forward, though, it is reasonable to expect that profitability will rise thanks to two factors: a (likely) dramatic reduction in insured losses and, thanks to broadly based signs of improvement in the US economy through H211, higher premiums. The major reinsurers have already made it clear that they are benefiting from rate rises: we strongly suspect that the US non-life insurers will be able to pass much of the consequent cost increase on to their clients. It seems highly likely that nominal and real returns from the US equity and fixed income markets will remain low during 2012: it will therefore remain crucial for the non-life insurers that they maintain discipline in pricing and underwriting risks.
For the largest life companies, demand for annuities continues to grow apace: many of the leading providers of annuities reported double-digit growth in sales in Q311 relative to Q310: it appears that US savers and investors see annuities as a particularly attractive vehicle for their savings at a time of financial market volatility, continuing a glut of real estate and rock bottom interest rates. Particular companies argue that they are benefiting from a flight to quality. Others note that sales of particular savings and wealth management products (ie: not necessarily annuities) are growing very quickly. Some companies are allowing sales of certain lines to contract as a result of deliberate policy to focus on profits rather than market share. In essence, the general slippage in profits that has resulted from an increase in reserves (given the volatility of financial markets in H211) has overshadowed real growth in large sections of the life insurance segment. As ever, particular companies are deriving significant benefit from innovation in terms of the development of new products or the promotion of new distribution channels.
Click for Report details:United States Insurance Report Q2 2012