ZACKS·2025-12-11 18:25Core Insights - The life insurance industry is focusing on redesigning and repricing products to maintain sales and profitability, with increased automation expected to drive premium growth and efficiency [1][5] - The Federal Reserve's recent interest rate cut to 3.5%-3.75% poses challenges for life insurers as they invest premiums to meet guaranteed obligations [1][3] - The life insurance market is projected to grow, with gross written premiums expected to reach $1.34 trillion by 2025 and $2.5 trillion by 2026 [2][4] Industry Overview - The Zacks Life Insurance industry includes companies providing life insurance and retirement benefits, with a growing demand for protection products driven by an increasing number of baby boomers [2] - Economic growth is fostering confidence in the market, although rising mortality costs may impact profitability [2] Trends Impacting the Industry - Interest rates have been lowered, which may weigh on investment returns for life insurers, but could also relieve pressure on indexed universal life and whole life sales [3] - Product redesigning is leading to a shift away from long-duration term life insurance, with a focus on investment products that offer bundled covers [4] - The adoption of technology is increasing, with insurers leveraging digital platforms and AI to enhance efficiency and reduce operational costs [5] Market Performance - The life insurance industry has underperformed compared to the S&P 500 and the Finance sector, with a year-to-date gain of 4.7% compared to 15% for the Finance sector and 18.6% for the S&P 500 [9] - The industry's current price-to-book (P/B) ratio is 1.89X, significantly lower than the S&P 500's 8.51X and the Finance sector's 4.22X [11] Company Highlights - Jackson Financial (Zacks Rank 1) is expected to grow due to diversified product sales and a strong contribution from Registered Index-Linked Annuities [15][16] - F&G Annuities & Life (Zacks Rank 1) is evolving into a fee-based, higher-margin business, capitalizing on demographic trends and untapped market demand [20] - AIA Group (Zacks Rank 2) benefits from a strong agent force and a shareholder-friendly capital return program, with earnings expected to grow [25] - Manulife Financial (Zacks Rank 2) is well-positioned for growth due to its strong Asia business and investments in digital capabilities [28] - Lincoln National (Zacks Rank 2) is expected to benefit from a recovering Group Protection business and pricing discipline [32]