Insurance Services Still Emerging From Depths Of Economic Downturn
According to Rothman Research, a leading research firm specializing in the insurance services
industry data, many insurance companies
are struggling to deal with loss of business as the financial sector is faced with a very difficult industry atmosphere in America. There is still tension in the industry about the massive $182.3 billion dollar AIG bailout. This atmosphere is likely to last at least until mid-2010. If progress occurs, the second part of the year should see the economy start to rebound more quickly.
Poor credit and equity markets lead to fewer losses anticipated in investments in the near future. This means premiums are dropping slowly. A dip in underwriting reserves have contributed to the industry tensions which are currently felt. AIG and Travelers Insurance Companies Inc. are both the focus of the Rothman Research report on the subject.
AIG is not recovering as quickly as first anticipated because the poor economy continues to hamper it. In addition, having to make regular repayments to the government and having no reserves have made the recovery process difficult. The last 3 months of 2009 saw AIG helping General Insurance with $2.3 billion from the loss reserves. A September 2008 injection of $85 billion from AIG gave it an almost 80% share in the company.
The fourth quarter also saw the Domestic Life Insurance & Retirement Service undergo a restructuration and reemerge as SunAmerica Financial Group. They also made major changes in how they deal with business relationships and their sales distribution channels. The new group is poised to be at the forefront of their industry worldwide. They have a strong US life and annuity program in place as well as a variety of other businesses.
The Travelers Companies Inc. is, in reality, a holding company with its own subsidiaries. They offer commercial insurance, personal property insurance, casualty coverage and other services as they relate to government departments, businesses and other associations. Its main segments include Business Insurance; Personal Insurance: and Financial, Professional and International Insurance. The portion which offers Business Insurance provides casualty and property insurance, as well as other insurance type services in the United States. The various offerings of the company include credit-based processes.
Given more time and the right conditions, these and other firms will improve even more significantly.