Insurers should be wary of sharp rate hike: A.M. Best
April 26, 2018 by Retirement Income Journal
A slow, smooth increase in interest rates by the U.S. Federal Reserve would allow life insurers/annuity insurers—especially those with minimal surrender protection or unattractive living benefits—to adjust crediting rates on existing products, reshape portfolio durations and help maintain credit quality for an optimal return, says a new A.M. Best special report.
But a sharp rise in increase rates could pose challenges to both sides of the balance sheet, the rating agency’s analysts added.
The Best’s Special Report, “Abrupt Interest Rate Hikes Could Pose Challenges to Life Insurers,” observes that the yield curve continues to flatten. The Fed’s recent rate hikes have lifted short-term interest rates but longer-term yields have been slower to respond.
Click HERE to read the full story via RIJ; subscription required.
