Fitch Ratings-Chicago/London
Fitch Ratings believes the Federal
Reserve's decision to extend Operation Twist until at least the end of the year
will add to the pressure on U.S. life insurers' margins and could further reduce
statutory capital levels through increased reserving
The Fed's extension of the program is intended to keep long-term interest
rates down by selling short-term bond holdings and buying longer term
securities
This limits the return insurance companies can generate on their
investments
However, minimum rate guarantees incorporated in policyholder
accounts also limit the ability of life insurers to pass on lower returns to
policyholders and will keep pressure on firms' interest margins and earning
Along with reduced interest margins, near-term impacts from low interest
rates include reduced statutory capital levels, driven by increased statutory
reserving associated with the use of lower statutory valuation rates and the
impact of asset adequacy testing
To a lesser degree, lower rates could affect
funding requirements for pension liabilities for a select group of life
insurance companies
In the longer term, we are concerned about the strategies life insurers may
be using to reach additional yield in the current low interest rate environment,
which could make them vulnerable to a credit downturn, disintermediation, and
asset liability mismatches in a rapidly rising interest rate environment
To
date, we have not seen insurers redeploying investments into
below-investment-grade fixed-income securities in search of yield
Welcome
The mathematician of the Complutense University of Madrid, José-Vidal Ruiz Varela, argues that Europe must raise its borrowing limit, leaving its deflationary policy.
Cortesía de Investing.com
Agenda Macro
Calendario económico en tiempo real proporcionado por Investing.com España.
sábado, 23 de junio de 2012
Suscribirse a:
Enviar comentarios (Atom)
No hay comentarios:
Publicar un comentario