Analyst: Growth Opportunities in Benefits, Life, PRT

The most promising growth opportunities for life insurers this year rest with group benefits, retail life insurance, pension risk transfer and some international markets, according to analyst Ryan Krueger.

Those were some of the key life insurance themes to emerge from the Association of Insurance and Financial Analysts conference last week in Naples, Fla.

“Annuity growth is also starting to improve after some difficult years, though competition appears a bit more elevated in indexed annuities,” wrote analyst Krueger, who follows life insurers for Keefe, Bruyette & Woods.

Companies have moved aggressively into the benefits space recently.

At Voya Financial, the return of capital from employee benefits last year was 24.4 percent, up from 23.3 percent in 2016, and voluntary benefit sales rose 24 percent in 2017, Voya Chief Operations Officer Alain Karaoglan told analysts in a conference call.

Voya plans to sell a big block of annuities as the company seeks to push further into benefits and asset management. The company’s life insurance business is also under review.

Life insurers are expected to continue with block transaction mergers and acquisition activity, but whole company mergers are expected to be more limited, Krueger wrote.

Analysts Miffed at Opaqueness

Long-term care was a big topic of discussion among AIFA analysts, as was the issue of unpaid annuity benefits.

Analysts were displeased when GE announced in January it would boost reserve contributions by about $15 billion over seven years. In addition, the company is taking an after-tax charge of $6.2 billion against fourth-quarter earnings after a review and reserve testing for GE Capital’s run-off insurance portfolio.

In February, MetLife said it would take a pretax charge of $510 million related to its group annuity business, as well as a quarterly charge of $70 million to cover unpaid benefits to about 13,500 workers going back many years.

While some other insurers with long-term care liabilities moved to reassure analysts that they weren’t facing the same challenges, analysts were frustrated at what appeared to be a one-two punch.

“The close proximity of GE’s long-term care charge and MET’s group annuity charge seemed to reduce investor confidence in the space and was a reminder of the opaqueness of life insurers,” Krueger wrote.

The AIFA conference attracts more than 300 insurance investors, analysts and companies in the property-casualty, life and annuity and reinsurance segments every year.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

© Entire contents copyright 2018 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].