Market Share Bible, Vol. XXXVIII
Macro Headwinds Eased, but Fundamentals Still Poor
Insurance - Life
Jimmy S. Bhullar, CFAAC
(1-212) 622-6397
jimmy.s.bhullar@jpmorgan.com
Erik J Bass, CFA
(1-212)-622-2295
erik.bass@jpmorgan.com
J.P. Morgan Securities Inc.
See page 82 for analyst certification and important disclosures.
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This report analyzes recently released market share statistics and
highlights our outlook for various life insurance industry products.
• We maintain a cautious stance on the life insurance sector. In the
near-term, the group is likely to trade based on moves in the credit and
equity markets, but our fundamental outlook is negative given expected
weak earnings, poor sales/net flows, and high investment losses. Also,
we forecast ROEs for most companies to be depressed relative to 2006-
2007 for the next several years. Capital levels seem adequate currently,
but a pullback in the markets would revive balance sheet concerns.
Although the group offers significant upside potential for long-term
focused investors, we are waiting for operating fundamentals to improve
and/or valuations to decline further before becoming more positive.
• Variable annuity results are likely to be pressured by the equity
market decline, poor net flows, and high market volatility. Hedge
costs/breakage should remain high in 4Q08, and several companies are
likely to incur DAC charges. Fixed annuity sales and margins should
benefit from the steep yield curve and wide credit spreads.
• The weak economy, poor equity market, and lack of securitization
activity should suppress individual life sales. We project universal life
sales to be flat, but expect term and variable life sales to decline in 2009.
• Competition in the disability market is accelerating. Margins remain
healthy but could compress modestly as unemployment rises. Higher
unemployment should also reduce enrollment levels and hold back topline
growth in the group disability and group life markets. We expect
long term care sales and margins to improve slightly but remain poor.
• Fundamentals in the life reinsurance business are favorable and we
forecast top-line growth and margins to benefit from strong demand,
tight capacity, and the disruption in the securitization market.
• RGA remains our top pick due to favorable competitive trends in the
life reinsurance market, strong foreign growth potential, and a
conservative investment portfolio. We also favor AIZ given our
expectation of sustained momentum in its specialty property business and
fewer concerns about investment losses. Among large cap stocks, we
believe MET and HIG offer the best risk/reward.
• Our outlook for PNX and PFG is negative. Additionally, we expect
business fundamentals for CNO, NFP, and PL to remain challenging and
advise investors stay on the sidelines despite the decline in these stocks.

Table of Contents
Fundamental Outlook Cautious ..............................................3
Outlook and Results by Product.............................................5
Variable Annuities .......................................................................................................5
Fixed Annuities & Equity Indexed Annuities..............................................................7
Individual Life .............................................................................................................8
Group Insurance.........................................................................................................10
Long-term Care & Supplemental Medical Products ..................................................11
Retirement..................................................................................................................12
Life Reinsurance ........................................................................................................13
Annuity Sales and Assets......................................................14
Life Insurance Sales and Assets...........................................43
Life Reinsurance Assumed and In Force .............................53
Disability Sales Premiums.....................................................57
LTC, DC, 457, and Other Products........................................65
Index of Tables .......................................................................79
Index of Figures......................................................................81