A.M. Best Co. changed the U.S. life insurance and annuity sector rating to ‘stable’ from ‘negative’. This information comes from the Insurance and Financial Advisor article “A.M. Best upgrades life/annuity sector’s outlook to ‘stable’,” by Bob Graham. In A.M. Best Co.’s opinion, the industry has sufficient capitalization to operate and even deal with added stress. After downgrading the industry’s ratings in 2009 because of financial impairments in the insurance companies, they believe that the industry will continue with moderate growth moving forward.
This industry has taken quite a hit since the end of 2008, both from the world’s economic problems and A.M. Best Co. A declining real estate sector, an increase in unemployment, low interest rates like fixed annuity rates, decreased consumer spending, and debt and credit problems factored into lower ratings. As insurance companies have improved their balance sheets, lessened the risk they take on, and moved in a favorable direction with regards to credit spreads and financial impairments, A.M. Best Co. recognized these improvements. While they recognize that the industry will continue to face challenges, they believe that the worst is over and the life and annuity industry is stabilized.
