Conning: Cutting Expenses Not Wise Planning For Insurers

The Conning study, "Life-Annuity Industry Expenses: Treading Water" explores life insurance and annuity expenses, analyzes how much "economies of scale" and product mix influence a company's efficiency, and whether low expense ratios lead to higher profitability in the current economic environment. By choosing appropriate peer groups, by size or business focus, insurers can evaluate their own expense trends against the industry.

"Technology expenses have been growing faster than other expense categories," said Steve Webersen, Head of Insurance Research at Conning. "Larger life insurers have lower expense ratios compared to smaller insurers and can absorb these expenses better through economies of scale. However, we have found that even lower expense ratios do not necessarily translate to higher profitability. Perhaps these expense increases can boost future growth and profitability, but results from recent years did not show a connection."

"Life-Annuity Industry Expenses: Treading Water" is available for purchase from Conning by calling (888) 707-1177 or by visiting  www.conningresearch.com.

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