We sincerely hope you had an enjoyable holiday season and are as excited as we are to face the opportunities and challenges of a new year. 2011 was our best year yet and we want to thank you for your support of our unique approach to helping clients understand and manage their life insurance assets.
There were a few ratings actions worthy of note:
- ING was downgraded from A to A-w- by S&P.
- Sun Life was downgraded from AA- to A-w- by S&P.
- Swiss Re was upgraded from A to A+ by AM Best.
The life insurance industry faces many challenges in 2012:
· Historically low interest rates, impacting investment spreads, credited rates on products and profit margins.
· An uncertain regulatory environment including the new Federal Insurance Office, potential oversight from the Federal Reserve for those deemed “systemically significant,” changing accounting rules as well as the potential for a material change in the tax code.
· Statutory earnings were weak in the third quarter though capital levels did increase somewhat and remain at greatly improved levels after the recent financial turmoil.
· Developing stronger distribution channels remains a priority for the industry reflecting declining market penetration as the number of families lacking individual ownership of life insurance increases.
Sun Life surprisingly decided to leave the US life insurance and variable annuity markets, joining other companies in exiting the volatile VA product line, leaving broker-dealers and their reps concerned about decreased product supply.
S&P and Fitch both announced a stable outlook for the industry.
As an unrelated but very encouraging note, Kim Laughton, the president of Schwab Charitable, noted in an interview in December that grant making in their donor-advised fund is up 35% and contributions to the fund are up 76%, very encouraging news for the non-profit sector.
So, now the New Year has begun – we hope 2012 is your best year ever!