Ongoing improvements in asset liability management, together with an overall optimisation of the capital structure have underpinned a generally positive assessment by market participants, as witnessed by the recent moderate over-performance of the insurance index relative to the broad stock index. [see slide 13]  However, there are a number of risks facing the industry in the period ahead.
For the non-life insurance sub-sector, increased competition is likely to weigh further on underwriting income, which could drive further consolidation within the sub-sector. For the life insurance sub-sector, ongoing  10  BIS Review 121/2006  challenges include the closing of balance sheet mismatches in an environment of persistently low long-term interest rates and the effective management of longevity risk. IV.