Life insurance confidence down, but remains higher than pre-credit crunch levels

Published on 1 October 2010

by Staff Writer

Ernst & Young yesterday released the results of their 29th quarterly life insurance industry confidence survey, reporting that life insurance confidence dropped to 81 index points from 91 in the previous quarter.

According to the survey, eight out of ten life insurance companies were satisfied with business conditions during 2010’s third quarter, compared to online five in ten a year ago, when the impact of the global liquidity crisis were negatively impacting financial services businesses across the board, but global liquidity exposed sectors, in particular.

Citing research conducted by the Stellenbosch Bureau for Economic Research, Ernst & Young reported that life assurance confidence weakened in the third quarter, largely driven down by equity volatility and lower investment income.

While life insurance companies reported lower profits against the backdrop of recent higher stock market volatility, this is still a far stronger position than recorded one year ago.

Money Web quoted Ernst & Young's Life Insurance sector spokesperson Tim Rutherford as saying that life insurance company’s earnings, and hence confidence levels, are strongly influenced by stock markets. The third quarter saw increased volatility, resulting in weaker investment income, which hence negatively impacted life insurers’ profitability.

Read more South African life insurance news here.

Resource: MoneyWeb