A. M. Best says that poor results from Manulife and Sun Life dragged down the overall financial results for publicly traded life and annuity (L/A) companies in the United States.
The ratings agency tracked the aggregate stock price performance of 23 L/A insurers and found that they had posted a 3.0% decline for the year, due mostly to macro-economic factors. Revenue results were also down, with only 9 insurers reporting an increase and overall results off by 8.5% compared to 2015 year-over-year. A. M. Best says the decline in revenues stemmed mostly from two Canadian companies, namely Manulife and Sun Life, which reported the largest revenue declines of 38.2% and 25.2% respectively.
Heightened sense of urgency
"Although most L/A companies in the first few months of 2016 have faced many of the same challenges present as when they entered 2015, there is a heightened sense of urgency for owners, shareholders and policyholders to ensure companies are not continually increasing risks," concludes the report. "The economy continues to pressure not only investment portfolio returns, but also the profitability of many products, both spread-based and those with underlying long-term interest rate assumptions."