Life and health industry's direct premiums written (DPW) increased by a solid 4.4% yoy in the first half of 2019 fueled by strong growth in the group life and the individual annuities businesses. Net income for the industry benefited in the first half because of an unusually high growth in annuity net premiums, which reflect the timing of various reinsurance arrangements rather than improvements in performance. Meanwhile, the Federal Reserve cut policy rates by 25 bps for a third consecutive time at their October meeting, citing "muted inflation pressures" and "global developments". As we expect economic data to deteriorate further in the next few months, we foresee one more rate cut in 1Q20. The elevated recession risk of 35% constitutes a threat to the growth of new business and lapse rates.
L&H direct premiums increased by 4.4%, driven by strong individual annuity sales.
Investment yields remain under pressure.
Profitability was up, with distortions from reinsurance.