As net investment income rebounds sharply, industry revenue is expected to spike
New York, NY (PRWEB) November 06, 2014
In spite of consistent increases in premiums derived from the industry's traditional products, investment income fluctuations have damaged the performance of the Life Insurance and Annuities industry over the five years to 2014. Industry operators accept liability under annuities and life, disability income and accidental death and dismemberment insurance policies. According to the latest available data from the Canadian Life and Health Insurance Association, domestic life insurance premiums have increased consistently on an unadjusted basis, rising from $15.1 billion in 2009 to $17.9 billion in 2014. Similarly, despite small dips in 2010 and 2011, annuity premiums have also generally increased from $36.4 billion to $38.7 billion over the same period. According to IBISWorld Industry Analyst Stephen Hoopes, “part of this increase in demand for industry products is related to the continued aging of the domestic population, with older individuals more intently focused on retirement and estate planning.”
Yet, an estimated 41.9% of the industry's assets are allocated to mortgages and fixed-income securities. Consequently, historically low interest rates have damaged the industry's investment gains in recent years. “Moreover, increases in government bond yields in 2013 harmed the fair values of the industry's existing fixed-income securities, with this trend largely to blame for the decline in industry revenue during the year,” says Hoopes. However, with net investment income anticipated to rebound sharply in 2014, coupled with continued increases in life insurance and annuity premiums, industry revenue is expected to spike during the year. In total, industry revenue is anticipated to fall over the five years to 2014.
Over the five years to 2019, industry revenue is forecast to rise. Despite a small dip in concentration levels in recent years, the industry is anticipated to remain dominated by Great-West Lifeco, Manulife and Sun Life, commonly referred to as the “big three”. Still, with low interest rates damaging the profitability of the industry's annuity products, these same players have increasingly focused on wealth management operations in recent years that fall outside the industry's scope. The industry's acquisitions have made this trend particularly apparent, with the potential for further regulation on the horizon set to spur additional consolidation in the years ahead.
For more information, visit IBISWorld’s Life Insurance and Annuities in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
The Life Insurance and Annuities industry accepts liability under annuities and life, disability income and accidental death and dismemberment insurance policies. Enterprises include fraternal organizations, privately held insurers, publicly traded insurers and mutual insurance companies.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.