Question

Outlook for Insurance Stocks

Can you find an article, and then summarize in your own words, how the stocks of insurance companies (stock insurers!) are predicted to perform in 2018, and why? The outlook may be different for life insurers than for P&C carriers.

Answer 1

The insurance stocks are expected to perform better in the near future mainly due to increase in rate of interest by the Federal bank and a further expected increase in near future, since insurance companies mainly depend on the rate sensitive instruments to invest their huge chunk of cash that they hold to meet the requirements of it's insurers. But this benefit is expected to be less, since in the recent past, due to low rate environment, the insurance companies have changed their investments from traditional ones to modern ones which would yield them a higher return. But nevertheless, the insurance companies mainly life insurers are expected to benefit from the high rate environment.

The P&C insurers due to recent natural calamities like hurricanes have incurred huge losses, but with some capital boost, they are expected to perform well.

With their investment income expected to rise due to high rates, it will help them sustain a higher growth in the near future.

Evolving new insurable risks, incrased capital inflow and premium rates for auto insurance augment well for the insurance industry.