Growth in global life insurance premium income is expected to be “robust” in the next few years, despite a decline last year, according to Swiss Re’s latest Sigma industry report.

Emerging markets will be the main driver of growth, while advanced markets are expected to turn positive again in the near term.

“Given the sheer sizes of the markets, advanced economies are forecast to still account for about half of the premium-dollar volumes added worldwide by 2021,” the report says.

Last year advanced markets accounted for 81% of global life insurance premium.

Among these markets, growth will likely be strongest in advanced Asia, the report says.

Global life insurance premium grew 2.5% last year to $US4.7 trillion ($6.1 trillion), well down on the previous year’s growth of 4.4%, according to Swiss Re. The drop is attributed to slower sales in advanced markets and a decline in emerging markets except for China.

Total direct premium volumes in North America and western Europe were flat at $US1.4 trillion ($1.8 trillion).

China was the third-largest market with premiums at $US466 billion ($614 billion), followed by Japan with $US471 billion ($620 billion).

In advanced Asia premium volumes were down 0.7%, with Japan’s result suffering from the nation’s negative interest rate policy.

Premiums contracted sharply in Oceania as lower yields rendered investment-type products less attractive in Australia, the report says.

Slowing premium growth and low interest rates are putting pressure on life insurer profitability, Swiss Re says.

Global return on equity, based on 39 insurers, fell to 8% at the end of last year from 11% the previous year.

“The industry has not managed to return to pre-financial crisis levels of profitability,” Swiss Re says. “In 2006 the sector’s return on equity for the same sample of insurers was 16.5%.”

In North America, return on equity was 8%, with Europe at 9% and Asia 7-8%.

Despite the uniform returns, global life insurers will continue to move into emerging markets, due to their premium growth, the report says. And Asian insurers are moving into advanced markets, attracted by large premium pools.

Swiss Re says global life insurers face headwinds from legacy products and management of their investment portfolios due to low interest rates.