A.M. Best Special Report: U.S. Life/Annuity Sector Holds Gains As Economy Continues to Strengthen
OLDWICK, N.J.--(BUSINESS WIRE)--The U.S. life and annuity sector has maintained strong risk-adjusted capital, generated steady GAAP and statutory operating earnings, improved balance sheet fundamentals and enhanced risk-focused decision making by company management, according to a special report by A.M. Best Co.
A.M. Best notes that the benign credit environment, combined with significant de-risking of life companies’ investment portfolios, has resulted in most insurers reporting relatively modest investment impairments in 2013. Meanwhile, they have maintained net unrealized gains in their fixed-income portfolios with only minor pockets of unrealized losses. A.M. Best’s rating outlook for the U.S. life and annuity sector remains stable.
In January 2013, a political stalemate with the potential for an unfavorable resolution of the fiscal cliff threatened to push the U.S. economy back into a recession. Fortunately, cooler heads prevailed, and for the next year, economic indicators and the equity markets steadily advanced. Considerable hiring over the August-December period reduced the U.S. unemployment rate to a five-year low of 6.7%, which is an encouraging sign that the U.S. economy has stabilized. The Dow Jones Industrial Average reached an all-time high at the end of 2013, up 26.5% from year-end 2012. Automobile and home sales are surging, manufacturing is gaining, and the trade deficit is narrowing. Also, real gross domestic product jumped 4.1% in the third quarter (vs. the second quarter) and 3.2% in the fourth quarter (vs. the third quarter), showing strong momentum going into 2014.
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