Life Industry Capital Buildup Facing New Pressures
May 24, 2017
Conning—Life Industry Capital Buildup Facing New Pressures
(Hartford, CT) May 24, 2017—The life insurance industry has built its capital base significantly in the years since the recession. However, life insurers have been challenged to profitably deploy that capital, according to a new study by Conning.
“The U.S. life insurance industry has rebuilt its capital base by nearly 50 percent since the economic crisis and resulting capital decline of 2008,” said Terence Martin, a Director, Insurance Research at Conning. “In general, large insurers have had stronger capital growth and less volatility than the midsized and small companies. When analyzed by product focus—life, annuity and mixed—the components of capital change were significantly different for each category, but the total growth was almost identical for the three groups.”
The Conning study, “Capital Buildup in the Life Industry: Under Pressure, with Limited Deployment Opportunities” analyzes the build-up of capital in the life industry and its drivers. Differences in capital buildup among insurers based on their size, product focus, or corporate structure are reviewed. Finally, key threats to continued capital growth are analyzed.
“Life-annuity insurers have enjoyed a period of increasing excess capital that supported operating flexibility, growth and dividends to stockholders and policyholders,” said Steve Webersen, Head of Insurance Research at Conning. “Looking forward, excess capital growth will slow due to increasing regulatory and rating agency constraints. As a result, insurers may well find themselves with less flexibility to address new market challenges they might confront.”
“Capital Buildup in the Life Industry: Under Pressure, with Limited Deployment Opportunities” is available for purchase from Conning by calling (888) 707-1177 or by visiting www.conningresearch.com.
Conning (www.conning.com) is a leading global investment management firm with almost $113 billion in global assets under management as of March 31, 2017.* With a long history of serving the insurance industry, Conning supports institutional investors, including pension plans, with investment solutions and asset management offerings, award-winning risk modeling software, and industry research. Founded in 1912, Conning has offices in Boston, Cologne, Hartford, Hong Kong, London, New York, and Tokyo.
*As of March 31, 2017, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited, and Cathay Securities Investment Trust Co., Ltd. ("SITE"). SITE reports internally into Conning Asia Pacific Limited, but is a separate legal entity under Cathay Financial Holding Co., Ltd. which is the ultimate controlling parent of all Conning entities.