US Life Insurers Are Under Mounting Yield Pressure

The decline in interest rates and bond yields in response to the COVID-19 crisis and the expectation that interest rates will be lower for a longer time than expected, will affect the financial performance of the US life insurers.

The decline in interest rates and bond yields in response to the COVID-19 crisis and the expectation that interest rates will be lower for a longer time than expected, will affect the financial performance of the US life insurers.

According to a Fitch Ratings Thursday morning report, investors in the United States and all over the world expect Federal Reserve stimulus measures, a continued economic uncertainty and the rise in negative yielding fixed income around the world to weigh on upward movements in yields over the next few months.

Fitch Ratings also said that US life insurers are exposed to interest rate risk because of the industry’s concentration in interest-sensitive product lines and of investments in fixed-income assets. 

The report added that sustained low rates impact every single major product lines, particularly guaranteed universal life insurance, payout and other fixed annuities, and long-term care insurance.


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