NEW YORK (S&P Global Ratings) Jan. 29, 2025--Life insurance remains one of the most stable and highly rated sectors that S&P Global Ratings covers, according to our new report: "North American Life Insurers Sector View 2025: Very Cautious Optimism".
This year we think market fundamentals will likely benefit insurers' profitability but not to a significant enough degree to affect our ratings, which stand at a median of 'A+' for the U.S. sector; with 97% in the 'AA' and 'A' categories.
We are closely following several trends that each could either be beneficial or detrimental to life insurers in the medium-to-long term:
- The macroeconomic environment, including interest rates, corporate bond defaults, and the risk of recession, is largely trending positive, but some risks persist.
- Increased allocation to private-credit investments can potentially raise yields but also increase credit risk.
- Greater use of offshore reinsurance brings more third-party capital to the industry and better capital efficiency but could decrease transparency for investors, regulators, and others.
- Exposure to commercial real estate, particularly office buildings, will likely cause some investment losses, but we believe they will largely be contained.
We are also monitoring additional drivers of uncertainty for the industry for which the outcomes and impacts on life insurers are still developing (such as geopolitical tensions, regulation, and AI).
This report does not constitute a rating action.
The report is available to RatingsDirect subscribers at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by sending an e-mail to research_request@spglobal.com. Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box at www.spglobal.com/ratings.
| Primary Credit Analyst: | Carmi Margalit, CFA, New York + 1 (212) 438 2281; carmi.margalit@spglobal.com |
| Secondary Contact: | Kevin T Ahern, New York + 1 (212) 438 7160; kevin.ahern@spglobal.com |
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