Thriving inThriving inan Economic Downturn:an Economic Downturn:
What Lies Ahead?What Lies Ahead?20th A l E ti C f20th Annual Executive Conference
for the Life Insurance IndustryNew York, NY,
November 6, 2009
Steven N. Weisbart, Ph.D., CLU, Senior Vice President and Chief EconomistInsurance Information Institute ♦ 110 William Street ♦ New York, NY 10038
Tel: (212) 346-5540 ♦ Cell: (917) 494-5945 ♦ [email protected] ♦ www.iii.org
Presentation Outline
• Isn’t the Downturn Over?The Housing Market: Still a Source of Downward PressureA Full-employment Economy? It’s Many Years Away
• Interest and Inflation Rate Expectations• The New Financial Anxiety• Individual Life Insurance: Status Reportp
Sales, Lapse, Policy Loan Trends
• A Financial Security Budget Target?y g g• Q & A
Wait a Minute:Wait a Minute: Isn’t theIsn’t the
DDownturn Over?
Real Quarterly GDP Changes (annualized),
2005:Q3-2010:Q4F Red bars are actual; Yellow
4%8%
Q QSpike due almost entirely to the weak dollar
(growing exports and slowing imports)
;bars are forecasts/estimates
3.1%
2.1%
5.4
4%
3.0%
%
3.2% 3.
6%
2.1%
5%
3.5%
2.4% 2.6% 2.7% 2.8% 2.9%
2%
4%
6%
2
1.4
0.1%
1.2% 2
1.5
.7%
.7%
2%
0%
2%
%
-0.
-0.
-2.7
%
6%
-4%
-2%
The Q1:2009 decline was th t t i th
-5.4
%
-6.4
%
-8%
-6%
5:3Q
5:4Q
6:1Q
6:2Q
6:3Q
6:4Q
7:1Q
7:2Q
7:3Q
7:4Q
8:1Q
8:2Q
8:3Q
8:Q
4
9:1Q
9:2Q
9:3Q
9:4Q
0:1Q
0:2Q
0:3Q
0:4Q
the steepest since the Q1:1982 drop of 6.4%
05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10
Sources: US Department of Commerce, Bureau of Economic Analysis (actual) at http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htmBlue Chip Economic Indicators 10/09 issue (forecasts).
Total Industrial Production, monthlyMar 2001-Sept 2009 (Index 2002=100)*
113
Mar 2001-Sept 2009 (Index 2002=100)*
Recession began December 2007
Index
March 2001-
110
December 2007
H i
November 2001 recession
104
107 Hurricane Katrina
101
95
98 Industrial production turned up in July
95
Mar
01
Jun
01
Sep
01
Dec
01
Mar
02
Jun
02
Sep
02
Dec
02
Mar
03
Jun
03
Sep
03
Dec
03
Mar
04
Jun
04
Sep
04
Dec
04
Mar
05
Jun
05
Sep
05
Dec
05
Mar
06
Jun
06
Sep
06
Dec
06
Mar
07
Jun
07
Sep
07
Dec
07
Mar
08
Jun
08
Sep
08
Dec
08
Mar
09
Jun
09
Sep
09
Source: http://www.federalreserve.gov/releases/g17/ipdisk/ip_sa.txt. *seasonally adjusted5
U.S. Nonfarm Private Employment, Monthly Nov 2007 – Sept 2009Monthly, Nov. 2007 Sept. 2009
0 1 0 9 8 8 7 6
Millions Job loss is slowing. Only 263,000 jobs
Employment peak; recession starts
138.
0
138.
1
138.
0
137.
9
137.
8
137.
8
137.
7
137.
6
137.
6
137.
4
137.
0
136.
7
36.2
136 5137.0137.5138.0138.5 Only 263,000 jobs
lost in September
13
135.
1
134.
3
.7134 5135.0135.5136.0136.5
1
133
133.
0
132.
5
132.
2
1.7
4132.5133.0133.5134.0134.5
1
131
131.
4
131.
2
130.
9
130.5131.0131.5132.03 5
130.0Nov07
Dec07
Jan08
Feb08
Mar08
Apr08
May08
June08
Jul08
Aug08
Sep08
Oct08
Nov08
Dec08
Jan09
Feb09
Mar09
Apr09
May09
Jun09
Jul09
Aug09
Sep09
Seasonally adjusted. Source: US Bureau of Labor Statistics
But Problems RemainHousing is
S ill SStill a Sourcef D d Pof Downward Pressure
High Ratio of Unsold-Homes Inventory to Sales Will Likely Keep Prices Falling
Inventory of unsold homes number of homes sold
to Sales Will Likely Keep Prices FallingMillions of Homes, Annual Rate
7.1
6.56
7
8Inventory of unsold homes number of homes sold
# of house sales fell;inventory was roughly constant
# of house sales is slightly higher
.0 7 8 6 9 9 8 4.1
6
5.7
4.9
4.49 4.71
4.55 4.66
4.72 4.89 5.
24
5.10
4
5
6
2.8 3.
5 4. 3.7
3.6 3.8
3.6 3. 3.9
3.8 4
3.64 4
2
3
0
1
05 06 07 08
n-09
b 09 r 09
r 09
y 09
n 09 l 09
g 09
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Source: http://www.realtor.org/research/research/ehsdata
Many People’s Main Asset (Their Home) Has Lost 6 Years of AppreciationHas Lost 6 Years of Appreciation
210Home prices in July 2009
Index*
180190200 Home prices in July 2009
were about equal to August 2003
150160170
Current recession began in Dec ‘07
120130140
July 2009 index value was 144.23: home prices were
30% below their July
100110
n-00
n-01
n-02
n-03
n-04
n-05
n-06
n-07
n-08
n-09
30% below their July 2006 peak
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
Jan
*Case-Shiller Home Price Index (20-city composite); January 2000=100. Not seasonally adjustedSource: http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_History_072820.xls
“Shadow” Inventory of Unsold Homes: It’s Worse Than You ThinkHomes: It s Worse Than You Think
• Zillow com’s latest Homeowner Confidence SurveyZillow.com s latest Homeowner Confidence Survey (published August 18, 2009) asked homeowners how likely they would put their homes on the market if they saw signs of a turnaround in the next 12 months:saw signs of a turnaround in the next 12 months:
Very likely, 8% (7.5 million homes)( illi h )Likely, 9% (7.5 million homes)
But Adam York, economist for Wells Fargo S iti “ t d th t th t f h th tSecurities, “contends that the amount of homes that have not yet been listed for sale could be around 4-5 million.
Source: http://zillow.mediaroom.com/index.php?s=173
“Millions” More Foreclosures are LikelyMillions More Foreclosures are Likely
• “[A]ny modification program seeking to [ ] y p g gavoid preventable foreclosures has limits, HAMP included. Even before the current crisis, when ,home prices were climbing, there were still many hundreds of thousands of foreclosures. yTherefore, even if HAMP is a total success, we should still expect millions of foreclosures, as President Obama noted when he launched the program in February.”Source: Treasury Assistant Secretary for Financial Institutions Michael S. Barr, Written Testimony on Stabilizing the Housing Market before the House Financial Services Committee, Subcommittee on Housing and Community Opportunity (emphasis added)
At Midyear 2009, Over 40% of Subprime Loans Were Delinquent or in Foreclosure
(2005:Q1 2009:Q2)(2005:Q1-2009:Q2)
The Percent of Delinquent Prime Loans and Prime Loans in Foreclosure Is Still Rising Sharply
(2005 Q1 2009 Q2)(2005:Q1-2009:Q2)
Fewer People/Fewer People/ Organizations areOrganizations are
BorrowingBorrowing
Households and BusinessesAre Still “Deleveraging”
16% Home Mortgage Consumer Credit Business Corporate
g gPercent Change in Debt Growth (Quarterly since 2004 at Annualized Rate)
8%
12%Corporate
deleveraging
4%
8%
-4%
0%
Personal (mortgage) d l i
Consumer d ti ?
-8%
4:Q
1
4:Q
2
4:Q
3
4:Q
4
5:Q
1
5:Q
2
5:Q
3
5:Q
4
6:Q
1
6:Q
2
6:Q
3
6:Q
4
7:Q
1
7:Q
2
7:Q
3
7:Q
4
8:Q
1
8:Q
2
8:Q
3
8:Q
4
9:Q
1
9:Q
2
deleveragingdesperation?
2004
2004
2004
2004
2005
2005
2005
2005
2006
2006
2006
2006
2007
2007
2007
2007
2008
2008
2008
2008
2009
2009
Source: Federal Reserve Board, at http://www.federalreserve.gov/releases/z1/Current/z1r-2.pdf
A Full-Employment p yEconomy is Still
M Y AMany Years Away
Unemployment and UnderemploymentRates: Rocketing Up in 2008-9
18Traditional Unemployment Rate U-3Unemployment + Underemployment Rate U-6
January 2000 through September 2009, seasonally adjustedg p
Percent
14
1618 Unemployment + Underemployment Rate U-6
U-6 went from 9.2% in April 2008 to
9.8% Sept. 2009 unemployment rate (U-3) was the highest monthly rate since 1983.
1012
in April 2008 to 17.0% in Sept. 2009
g yPeak rate in the last 30 years: 10.8% in
Nov-Dec 1982.
6
8
24
00 01 02 03 04 05 06 07 08 09
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Jan-
0
Source: US Bureau of Labor Statistics; Insurance Information Institute.
U.S. Unemployment Rate ForecastsQuarterly 2009:Q4 to 2010:Q4Quarterly, 2009:Q4 to 2010:Q4
10.5%
10.1%10.3% 10.3% 10.3%
10.2%10.0%
10.1% 10.1%
9 9%10.0%
10.5%
9.8%
9.6%
9.9%9.8%
9.6%9.5%
9.2%
8.9%9.0%
U l t i t d t
8.5%09:Q4 10:Q1 10:Q2 10:Q3 10:Q4
Unemployment is now expected to peak in late 2009:Q4 or 2010:Q1.
10 most pessimistic consensus/midpoint 10 most optimistic
Sources: Blue Chip Economic Indicators (10/09); Insurance Info. Inst.
When Might All of the Lost JobsB R i d? 2016?Be Regained? 2016?
Source: Wall Street Journal, October 9, 2009, p. A3
I R WillInterest Rates Will Lik l St L fLikely Stay Low for
th F blthe ForeseeableFutureFuture
2009-2010 Inflation Forecast: Low Rates AheadLow Rates Ahead
6% Average inflation rate, 1992-2007: 2.67% Following J l 1990
4.9%5.1%
3.8% 3.8%4%
5%July 1990-
March 1991 recession
Following March 2001-November 2001 recession
3.0%3.2%
2.6%
1 9%
3.3%3.4%
2.5%2.3%
3.0% 2.8%
1 9%
2.8%2.9%2.4%3%
4%
1.5%1.9%
1.3%
1.9%
1%
2%
-0.5%
-1%
0%90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09F10F
1%
Sources: US Bureau of Labor Statistics (actual, blue bars); Blue Chip Economic Indicators, 10/2009 issue, (forecasts, yellow bars)
Theory: Re-ignited Inflation Won’t ThreatenUntil the Economy Returns to a Full-Employment
Level Likely a Few Years AwayLevel—Likely a Few Years Away
The markets areThe markets are starting to worry that the flood of money for the recovery will re-ignite inflation (th d b t(the spread between 10-Year TIPS and 10-Year T-Notes is10-Year T-Notes is widening).
Source: Cooper, “Hints of Recovery—And Fears of Inflation,” BusinessWeek, May 11, 2009, p. 8
Bond Yields Tend to Reflect Expected Inflation, but the Relationship is a Loose Onef
10%CPI-U % Change U.S. Treasury 10-Year Note Yield
8%
10%ForecastJuly 1990-
March 1991 recession
March 2001-November 2001
recession
6%
2%
4%
0%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09F
10F
-2%
0
Sources: US Bureau of Labor Statistics (history); Blue Chip Economic Indicators, 10,/2009 issue (forecasts)
Net Rate on L/H General Account Assets Tends to Follow 10 Year US T Note
14%
L/H Net Rate, Gen'l Acct 10-Year Treasury Note
Tends to Follow 10-Year US T-Note
12%
14%
8%
10%
4%
6%
2%
4%
980 81 82 83 84 985 86 87 88 89 990 91 92 93 94 995 96 97 98 99 000 01 02 03 04 005 06 07 08 09*
10*
19 19 19 19 20 20 020
1
*estimates/forecasts from October 2009 issue of Blue Chip Economic Indicators Sources: ACLI Life Insurers Fact Book 2008, p. 34; http://federalreserve.gov/releases/h15/data/Annual/H15_TCMNOM_Y10.txt
What’s the Longer-What s the LongerTerm ForecastTerm Forecast
for Interest Rates?
Will Federal Deficit Spending Ultimately Re-ignite Severe Inflation?
$200
$400 4%Federal Deficit ($ Bill)d fi it % f GDP
Ultimately Re ignite Severe Inflation?
-$200
$0
$200
0%
2%deficit as % of GDP
-$800
-$600
-$400
dera
l Def
icit
-4%
-2%
t as
% o
f GD
P
-$1,200
-$1,000
$800
Fed
-8%
-6% Defic
i
Deficit hit $1.6 trillion inFY 2009 (11% of GDP)
-$1,800
-$1,600
-$1,400
-12%
-10%
FY 2009 (11% of GDP),by far a post-WW II high
$1,800
1969
1975
1980
1985
1990
1995
2000
2005
2010
2015
2019
12%
Source: White House OMB Mid-year Budget Report at http://www.whitehouse.gov/omb/assets/fy2010_msr/10msr.pdf
In the 70s and 80s, When the Deficit Rose, Only High Interest Rates Dampened Inflation
16% 6%CPI Annual % changedeficit (-surplus) as % of GDP
Only High Interest Rates Dampened Inflation
12%
14%
4%
5%
8%
10%
CPI
3%
4%
4%
6%2%
0%
2%
0%
1%
0%
1970
1975
1980
1985
1990
0%
Will Inflation and Interest RatesRepeat the 1980 85 Pattern?
14%
L/H Net Rate, Gen'l Acct 10-Year Treasury Note
Repeat the 1980-85 Pattern?
12%
14%
8%
10%
4%
6%
2%
980 81 82 83 84 985 86 87 88 89 990 91 92 93 94 995 96 97 98 99 000 01 02 03 04 005 06 07 08
09F
10F
11F
12F
13F
14F
15F
16F
17F
18F
19F
1 1 1 1 2 2 020
1 1 1 1 120
1 1 1 1 1
Forecasts: Office of Management and Budget, Mid-Session Review, Fiscal Year 2010.http://federalreserve.gov/releases/h15/data/Annual/H15_TCMNOM_Y10.txt ; I.I.I. speculation for 2016-19
H W ll A M tHow Well Are Most People HandlingPeople Handling
RecentRecent Circumstances?Circumstances?
Not WellNot WellThey’re Livingy g
Close to the Edge
“How Long Could You Go Without Your Job Before Experiencing Significant Financial Hardship?”Experiencing Significant Financial Hardship?
40% up to 1 week
30%
35% up to 1 month
up to 4 months
up to 1 year
36.3% 36.8%20%
25%
erce
ntag
e
p y
over 1 year
26.3%21.9%
18.8%14 5%15.6%
10%
15%Pe
11.9%7.9%
14.5%10.0%
0%
5%
families with children families with no childrenfamilies with children families with no childrenSource: Jacob Hacker, The Great Risk Shift, rev. ed., Oxford University Press, New York, p. 102, citing a Gallup survey published in April 2003. Hacker notes that these results are after controlling for demographic variables such as age, income, race, education, and gender.
Trend: Growing Chance That a Family’s I Will D B 50% MIncome Will Drop By 50% or More
• The income instability yrisk has been rising for three decadesE t it t t• Even at its most recent “best” (at the height of the prosperity of the 1990s), the risk level exceeded all pre-1980 levelslevels
Source: Jacob Hacker, The Great Risk Shift, (New York: Oxford University Press), 2006, pp. 2, 14-15.
Ordinary Life InsuranceLapse Rates 1996 2008Lapse Rates, 1996-2008
9.0% Was the 2002 spike in lapse rates related
2008-09 recession; curve will likely
8.0%
in lapse rates related to the March 2001-
November 2001 recession?
curve will likely continue up in 2009
6 1% 6 1%
6.5%
6 1%6.4% 6.2%
7.1%
6.4%6.7%
6 1% 6 2%6.5% 6.6%
6 2%
7.0%
5.9% 6.0%
5.6%
6.1% 6.1% 6.1% 6.0%6.2%
5.9%6.1% 6.2%
5.9% 5.7%5.4%
4.9% 4.9%5.1%
6.2%
5.0%
6.0%
4.9% 4.9%
4.0%1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
by number of policiesby amount of insurance
Sources: NAIC Annual Statements, p. 26 line 15 (lapses) and average of lines 1 and 21, from National Underwriter HighlineData; I.I.I. calculations
Policy Loans Increase During/Followinga Recession but Also in Boom Times
$120 $16 000
Policy Loans Nominal GDP
a Recession, but Also in Boom TimesBillions in Loans GDP, Billions
July 1990-
$100
$120
$14,000
$16,000July 1990-March 1991
recessionJuly 1981-November
1982
$80
$100
$10,000
$12,0001982 recession
$60
$
$6,000
$8,000
March 2001-November 2001
$40
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 9*
$2,000
$4,000November 2001
recession
198
198
198
198
198
198
198
198
198
198
199
199
199
199
199
199
199
199
199
199
200
200
200
200
200
200
200
200
200
2009
Sources: http://www.bea.gov/national/xls/gdplev.xls , ACLI Life Insurers Fact Book 2008, p. 11.
Th Old G i Mi hThe Older Generations MightBoost Economic Growth andBoost Economic Growth and
Life/Annuity PurchasesLife/Annuity Purchasesby Continuing to Worky g
More Workers Are DelayingTheir Planned RetirementTheir Planned Retirement
100%Percent
66%
84%79%
89%
75%70%80%90%
100%
66%
50%60%70% 2003
20042005
16%21% 18%
28%32%
20%30%40% 2008
2009
0%10%20%
% h h d ti t i % h h d t d l ti t% who changed retirement age inpast 12 months
% who changed to delay retirement
Source: EBRI Issue Brief No. 316, (April 2009), p. 14
Age When Workers Planto Retireto Retire
60%Percent of Workers
50%
41%50%
31%31%37%
26%26%31%
30%
40% 199419992004
11%
18%22%23%
10%
20%20042009
11%
0%5%6%
10%
0%
10%
0%before age 65 at age 65 age 66 or older never retire
Source: EBRI Issue Brief No. 316, (April 2009), p. 14
Past and Projected Labor Force Participation Rates, by Age Groupp , y g p
75%Participation Rate
69.6
%
%70.1
%
.5%
%
2006 201658
.2%
6350%
28.8
%
%
34.6
%
5.1%
%
25%
19.2
%
9.5%
4.4%
25
14.7
%
7.6%
0%55 64 55 64 65 74 65 74 75+ 75+men 55-64 women 55-64 men 65-74 women 65-74 men 75+ women 75+
Source: Mitra Toossi, “Labor force projections to 2016: more workers in their golden years,” Monthly Labor Review, November 2007, Table 3.
Labor Force Participation, Ages 55d O 2006 Q2 2009 Q3and Over, 2006:Q2-2009:Q3
15Labor force participation by workers—
especially women—age 55 and over hasLabor Force (millions)
1 4.2 4.3
14.3
14.3
4.2
4.214
15
men women
especially women age 55 and over has grown in spite of the current recession.
( )
.9 .0
13.8
13.8
13.6
13.4
13.4
13.2
13.2
14.
14 1 1 1 14 14
13
14 men women
6 .8 1.9
12.0 12
.2
12.3 12
.5
12.5 12.6 12
.8
12.8 12
.
13.1
12
11.4 11.6 11
.
11 1
11
006:Q
200
6:Q3
006:Q
400
7:Q1
007:Q
200
7:Q3
007:Q
400
8:Q1
008:Q
200
8:Q3
008:Q
400
9:Q1
009:Q
200
9:Q3
2006
2006
2006
2007
2007
2007
2007
2008
2008
2008
2008
2009
2009
2009
Source: US Bureau of Labor Statistics, http://www.bls.gov/web/cpseed6.pdfseasonally adjusted quarterly averages
People Over 60 areI i l B iIncreasingly Buying
Individual Life InsuranceIndividual Life InsuranceThey’re the only age group like thisThey re the only age group like this
Percent Change* in Applications for Individual U.S. Life Insurance Policies,
M 2007 S 2009
16%
May 2007- Sep 2009The 0-44 age group still represents
the majority of the premium Ages 60 and over is the
10%
12%
14%j y p
volume, but this has been declining over time.
only group consistently increasing
life insurance
6%
8%
10%
vs P
rior Y
ages 0-44
applications.
0%
2%
4%
% C
hang
e v g
ages 45-59ages 60+
-6%
-4%
-2%
May 07Jul 07Sep 07Nov 07Jan 08Mar 08May 08Jul 08Sep 08Nov 08Jan 09Mar 09May 09Jul 09Sep 09
-8%
-6%
*vs. same month, prior yearSource: MIB Life Index, monthly releases
Not Just Retirees: Many People Don’t Know Where They’re Going or How to Get ThereWhere They re Going or How to Get There
Source: National Underwriter (L/H), June xx, 2008, p. xx
Cover Art for July/August 2008 I f AARP B ll tiIssue of AARP Bulletin
Source: AARP Bulletin, Vol. 49, No. 6 (July/August 2008)
C l iConclusion:P l N d H lPeople Need Help
C t ti Th i OConstructing Their Own Financial Safety NetFinancial Safety Net
Step 1:Give Them a Spending TargetGive Them a Spending Target
Wh P f IWhat Percent of IncomeSh ld P l S dShould People Spend
t Ato AssureTheir Financial Security?Their Financial Security?
As a Percent of Personal (Gross) Income,Personal Insurance Premiums Are Down
8.2%
Personal Insurance Premiums Are Down
8.0%
8.1% Personal Insurance Premiums include all Life, A&H,
Annuities, and Personal / l
7.8%
7.9%Property/Casualty Insurance.
7.6%
7.7%
7.4%
7.5%
2001 2002 2003 2004 2005 2006 2007 2008Sources: http://www.bea.gov/national/xls/gdplev.xls , Best’s Aggregates and Averages, Life/Health, 2009 Edition, p. 173 and Property/Casualty 2009 edition, p. 573., I.I.I. calculations
L-H IndustryyProfitability
L/H Industry Net Income, 1995-2008
$32.2$35.9 $36.2
$31.9$35$40$45
$13.6$19.2 $21.7
$18.0 $20.9 $22.2
$9.8
$26.6$3 9
$15$20$25$30$35
$4.1
-$10-$5$0$5
$10
Billio
ns
$-$30-$25-$20-$15$10B
2006 net income rose only 0.8% despite
-$50.6-$55-$50-$45-$40-$35
y p10.5% net premium growth, because
surrenders grew 20.4%, disability benefits grew 21.6%, and total expenses grew 13.1%.
$$
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: NAIC Annual Statements, p.4, line 35, from National Underwriter HighlineData.
Effect of Realized Capital Gains/ Losses on Net Income 1995 2008Losses on Net Income, 1995-2008
$35$40
6 9.2 1.7
.0 0.9
2.2
26.6
$32.
2
$36.
0
$36.
2
$31.
9
$$15$20$25$30$35
L/H NetIncome
$13.
6
$19
$21
$18
$20
$22
$9.8
$4.1 $ 2 $ $
-$10-$5$0$5
$10
L/HRealized
-$51
.7
-$35-$30-$25-$20-$15
RealizedCapitalGains(Losses)
-$55-$50-$45-$40-$35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: NAIC Annual Statement data, Summary of Operations and Exhibit of Capital Gains (Losses)from Highline National Underwriter
Life Insurer Operating Expenses, (excl. Commissions) 1995-2008(excl. Commissions) 1995 2008
$200,000$ Millions
067
$150,000
4 541
42,5
90
$165
,243
46,1
49 $193
,0
711
72 2,93
8
49,7
95
711
41,9
20
154,
559
432$100,000
$105
,804
$126
,5
$14 $
$14
$127
,7
$116
,27
$132 $1
$122
, 7
$14 $1
$121
,4
$50,0001995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Best’s Aggregates and Averages, Life/Health, 2009 Edition
Summary & Conclusiony• The capital markets are still weighed down by the p g y
housing market and lenders’ reluctance to lend• Given the present and likely future unemployment
picture, the economy is unlikely to show signs of recovery in the near term
• Sales of individual life insurance policies have• Sales of individual life insurance policies have been trending down for 6 years
• Trend toward increasing labor force participationTrend toward increasing labor force participation by those over 55 seems likely to continue
These people have been increasingly buying life iinsurance
Insurance Information Institute On LineInstitute On-Line
If you would like a copy of this presentation, please give me your business card with e-mail address