OLDWICK, N.J.–(BUSINESS WIRE)–In this episode of AMBestTV, Associate Director Jason Hopper and Financial Analyst Igor Bass, both of AM Best, said economic turmoil from the COVID-19 pandemic is creating new challenges for life/annuity writers. Click on http://www.ambest.com/v.asp?v=interestrates820 to view the entire program.
Hopper outlined the steps that the life/annuity insurers have taken to de-risk their portfolios, while also describing some of the differences between interest-sensitive companies and non-interest-sensitive companies.
“The goal of the AM Best report was to see how investment strategies among these two groups have diverged,” said Hopper. “The report split the insurance industry into two camps based on product profiles and reserves in premium mix. Interest-sensitive companies are primarily individual or group annuity writers, deposit-type contracts or interest-sensitive life products, as defined by the NAIC. The results from the report were that there are twice as many non-interest-sensitive companies as interest-sensitive ones. However, interest-sensitive companies command about three-quarters of the total industry’s assets.”
Bass…
