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Monday, September 29, 2008
Fitch Lowers U.S. Life Insurance Sector Outlook To Negative
Wallace Witkowski
MarketWatch Pulse
SAN FRANCISCO -- Fitch Ratings on Monday lowered its outlook for the U.S. life insurance sector to negative from stable because of deterioration in credit and equity markets. The ratings agency said it has an "ongoing concern regarding the industry's expanding equity market exposure driven by growth in variable annuities, market performance guarantees on which can add significant volatility to financial performance and capital in a period of unstable market conditions." The negative outlook means that Fitch expects more downgrades than upgrades across the U.S. life insurance industry over the next 12 to 18 months.
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Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.
So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.
Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.






