For Immediate Release
Chicago, IL – January 23, 2013 – Today, Zacks Equity Research discusses the U.S. Insurance, including Aviva plc (AV), Genworth Financial Inc. (GNW), ING Groep NV (ING), WellPoint Inc. (WLP) and UnitedHealth Group, Inc. (UNH).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at
Link: http://www.zacks.com/commentary/25514/insurance-stock-outlook-jan-2013
The economic uncertainty is making it difficult for life insurers to expand their customer base. In fact, insurers are struggling to even retain their existing clientele. Narrowed disposable income owing to high unemployment and huge credit card debt has made it difficult for Americans to invest in retirement products such as life insurance.
Moreover, the low interest rate environment is one of the major risks for life insurers at this point. Investment income remains weak as life insurers are experiencing low returns on fixed-income instruments. Also, low rates are spoiling life insurers’ efforts to grow fixed annuities and universal life insurance sales.
In December, Fitch Ratings has affirmed the credit outlook for the U.S. life insurance industry at stable for 2013. This action was primarily based on the expectation of insurers’ improved liquidity and balance sheet strength. Further, the rating agency expects the nagging low interest rate environment to restrict earnings growth of the sector.
On the other hand, interest in cheaper products to cover only basic risks has increased. As a result some life insurers have already gone back to the basics in order to escape financial and regulatory difficulties.
Currently, the life insurers with favorable Zacks Ranks worth considering are Aviva plc (AV) with a Zacks Rank #1 (Strong Buy); Genworth Financial Inc. (GNW) and ING Groep NV (ING) with Zacks Rank #2 (Buy).
Health Insurers
The U.S. health care system is significantly dependent on private health insurance, which is the primary source of coverage for most Americans. More than half of the U.S. citizens are covered under private health insurers such as WellPoint Inc. (WLP) and UnitedHealth Group, Inc. (UNH).
Unfortunately, these insurance companies utilize a pre-existing condition exemption clause to control costs and maximize profits. In 2010, the historic healthcare reform legislation -- The Patient Protection and Affordable Care Act (:PPACA) -- was passed by the Congress with the intension of making health care facilities more affordable, preventing private insurance companies from continuing with the pre-existing condition clause and at the same time bringing in 32 million more people under coverage by 2019.