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In This Issue: Cover Story For North American Insurers In 2008, Discipline Will Be The Key To Success By Grace Osborne, New York Standard & Poor's outlook for the North American life, health, property/casualty insurance, and reinsurance sectors is stable due to several years of strong earnings, improved levels of capital adequacy, ample liquidity, and strong balance sheets. However, the number of ratings raised over the next six months is expected to be offset by the number of ratings lowered. 2008 U.S. Life Insurance Outlook: Mounting Pressures Could Challenge Sector Stability By Frank E. Benassi and Amy Friedman, New York For 2007 and 2008, Standard & Poor's expects U.S. life insurance company revenues to grow about 2% per year, with earnings growth more constrained than in 2007. However, company-specific issues rather than industry-wide trends will determine rating movements in 2008. Therefore, we are maintaining our stable outlook on the U.S. life insurance industry. 2008 U.S. Managed Care Insurer Outlook: Slower Growth, Eroding Margins, Politics, And Yet More Politics By Robert McNatt, New York For managed care, the earnings gravy train has slowed down. Although Standard & Poor's sees this sector continuing to gain economies of scale from small-sized mergers, holding medical cost inflation at bay, and maintaining rational pricing, the industry is past the peak of its cycle. For the managed care industry, 2008 will be as much about politics as anything else. 2008 U.S. Personal Lines Outlook: A Quiet Year Fuels Profits, Though Softening Prices Loom By Amy Friedman, New York Standard & Poor's is forecasting flat bottom- and top-line growth for the U.S. personal lines insurance sector in 2008, with net written premiums experiencing low-single-digit growth, at best. If 2008 is a normal year for catastrophes, profit margins should be healthy. The companies that sustain a competitive advantage will be the ones that continue to evolve and enhance their enterprise risk management and maintain prudent underwriting and pricing discipline. 2008 U.S. Commercial Lines Outlook: Earnings Still Strong, But Weaker Prices Should Start To Hit Bottom Lines By John Iten, New York Unless there is a major negative surprise in December 2007, earnings for commercial lines companies will approach the record level achieved in 2006. Balance sheet strength for most insurers, driven by higher statutory surplus and diminished concerns about reserve adequacy, will also continue to improve. Standard & Poor's expects the trend of the past three years to continue in 2008, with relatively few rating changes and similar numbers of upgrades and downgrades. Will The Good Times Last For Bermudian Re/Insurers? By Taoufik Gharib, New York Results for Bermudian re/insurers have been collectively very strong over the past two years, but the environment is changing, and they will face many new challenges. Current ratings are expected to be relatively stable over the next six months and reflect Standard & Poor's view that they have positioned themselves to weather the soft part of the business cycle through enhanced enterprise risk management, disciplined underwriting and cycle management, and prudent capital management strategies.