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Morgan Stanley has raised its outlook on the life insurance industry. The outlook on the overall industry was upgraded stating, “concerns about capital adequacy have diminished and the fundamental outlook for the group is improving.”

Morgan Stanley said it expects book values to sharply increase when life insurers report second-quarter earnings and if credit markets remain stable, book values may rise just over 20 percent on average.

Many life insurers are holding significant excess liquidity at their subsidiaries that might be used to invest in bonds, boosting net interest income, and the benefits of various expense-reduction programs could be seen by the end of the year, the brokerage said.

Click here for the full article from Reuters.

On the flipside, Standard & Poors is maintaining its negative outlook for the life insurance industry.  The rating agency indicates that there will likely be more downgrades than upgrades over the next 6 month period.

Click here for the full article from National Underwriter.

The New York Times recently published an article talking about the negative effect that the economic downturn has had on variable life insurance policies.

“These policies combine insurance protection with a tax-deferred investment account that helps to pay the premiums. During the bull market, they promised investment returns high enough to limit the size and duration of premium payments. But the marketers didn’t stress the downside: if investment performance falls short, policyholders must spend more on premiums.

And that’s what has happened. Now, policyholders must pay higher premiums, for more years, to maintain their current level of insurance. The alternative is to reduce the coverage, which sometimes leads to a surrender charge.” Full Article.

I specialize in reviewing life insurance policies and helping clients find coverage that is more economical and suitable for each client’s particular goals.

A recent survey indicated that an economic turnaround could fuel an dramatic increase in life insurance mergers and acquisitions. Click here for full story from Insurance & Financial Advisor.

According to a University of Florida study reported in the Orlando Business Journal, Florida’s consumer confidence fell one point, to 71, but Floridians are expecting the  financial future of Florida will be better a year from now.  While many say they don’t have the money now to buy, they expect to have it in the future.  Floridians polled say they are feeling better about the future, with expectations of personal finances a year from now up five points to 90, the highest level since October 2007.  See the whole article.

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