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With the global economic rebound gaining traction, Moody’s Investors Service has upgraded its outlook on the global life insurance sector to stable from negative.

The rating agency raised its outlook for the sector, citing improved short-term growth prospects and a stronger operating environment for life insurers.

“Industry growth will be supported by a rebound in the global economy as the progress in the roll-out of mass vaccinations has meant the United States and Europe are on the verge of leaving the pandemic behind them,” Moody’s said.

Yet, delays in vaccine rollouts in parts of the Asia Pacific region are creating economic challenges in some emerging markets, the rating agency noted.

“Strong solvency capital ratios globally underpin our view of the outlook,” said Manoj Jethani, vice-president at Moody’s, in a release.

“Although pandemic mortality continues to weaken profitability, the overall impact on the credit profile of life insurers has been less severe than originally expected due to differences in demographics of the general versus the insured population, as well the benefits of diversification from longevity-type insurance products,” Jethani said.

Moody’s noted that the global life insurance sector is undergoing a transformation, with a “wave of M&A and divestitures…the industry is shifting to higher-growth, capital-light businesses that require greater scale.”