Job losses likely as Australian life sector consolidates
Moody’s Investors Service has outlined a generally upbeat prognosis for the Australian life insurance industry, but says further consolidation will almost certainly result in job losses.
In a new report on the sector’s outlook, Moody’s has outlined relatively robust financial health and prospects over the next year to 18 months.
But it has forecast further local consolidation as smaller wealth managers merge or are acquired by larger competitors. It says redundancies “appear unavoidable”.
The report says a drop in the value of assets in non-investment linked funds and shareholder funds has eroded surplus capital, but life insurers have been able to replenish capital through additional equity and debt raising, and by reducing dividend payments.
“Another encouraging sign is the increase in sales of wealth protection products by life companies due to a greater sense of awareness that income protection goes hand in hand with wealth accumulation,” Moody’s Senior Analyst Wing Chew said.
In a new report on the sector’s outlook, Moody’s has outlined relatively robust financial health and prospects over the next year to 18 months.
But it has forecast further local consolidation as smaller wealth managers merge or are acquired by larger competitors. It says redundancies “appear unavoidable”.
The report says a drop in the value of assets in non-investment linked funds and shareholder funds has eroded surplus capital, but life insurers have been able to replenish capital through additional equity and debt raising, and by reducing dividend payments.
“Another encouraging sign is the increase in sales of wealth protection products by life companies due to a greater sense of awareness that income protection goes hand in hand with wealth accumulation,” Moody’s Senior Analyst Wing Chew said.