Liquidity pressure on life insurers a low probability event - Jefferies

Jackson Financial

20/03/2023 12:08

** Brokerage Jefferies sees liquidity pressure risk on the
life insurance sector as a low probability event as investor
attention shifts to liabilities from assets in the wake of
SVB-Signature Bank developments 
    ** Life insurance sector facing a 'run risk' in the same way
a retail bank is a fairly remote risk - brokerage
    ** Accessing funds from life insurance products more complex
 relative to tapping funds from a bank account - Jefferies
    ** Brokerage also notes certain insurers impose
discontinuance charge on early withdrawals
    ** Retail sales in the sector occur when a distributor
convinces an individual of the need for protection against
morbidity or longevity risk- needs which don't disappear when
economic conditions change, rather become more acute in periods
of stress, brokerage notes
    ** Jefferies sees liquidity pressure risks for businesses
around fixed indexed annuities which are insurance products that
combine guaranteed protection from loss due to market downturns 
 
    ** In last 8 sessions, S&P 500 health and life insurance
index  .SPLRCLIFE  down over 16% vs a 2% fall in the benchmark
S&P 500 index  .SPX   

 (Reporting by Aditya Samal)
 ((Aditya.Samal@thomsonreuters.com;))