May 30 - The North American life insurance industry is facing a number of challenges despite strong earnings and balance sheets. In a new report, "North American Life Insurers' Balance Sheets Are Strong, But Better Earnings Might Be Hard To Come By," published May 30, 2012, on RatingsDirect, Standard & Poor's Rating Services says that its credit outlook for the North American life insurance industry remains stable. This is supported in large part by strong capital and liquidity, as well as sound investment portfolios that have incurred only moderate losses. "We expect life insurers' net investment income to remain constricted by low interest rates," said Standard & Poor's credit analyst Matthew Carroll. "We anticipate that this, along with intense competition (particularly in more-commoditized products distributed through third parties), will likely continue to limit operating margins and lower the potential for our taking any positive ratings actions." On the whole, we expect few rating changes in 2012--unless we lower our sovereign rating on the United States of America, which would likely lead to downgrades of the eight life insurance groups we currently rate 'AA+'. "Under our baseline economic assumptions, we expect the North American life insurance industry to maintain strong balance sheets with relatively stable earnings," Mr. Carroll continued. "Life insurers' earnings are largely a function of the performance of policies in force, with new business contributing modestly to current-year earnings. We view the life insurance sector as a mature industry that should grow in tandem with GDP, though we believe sales of retirement savings products will likely develop at a faster pace, reflecting an aging population seeking solutions for retirement income." The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to firstname.lastname@example.org. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com.