Life/Annuity carriers hold the rosier view by far
OLDWICK, N.J., April 3, 2015—Insurers have become increasingly pessimistic about the possibility of a material change in interest rates this year, according to the results from a recently published A.M. Best industry survey.
The special report titled, “A.M. Best Winter 2014-2015 Insurance Industry Survey,” revealed that 67% of respondents believe that interest rates will remain below 2.25% by the end of 2015, compared with 11% of respondents who shared the same sentiment during the summer survey. Life insurers had the most optimistic view of interest rates, with just 22% of this segment’s respondents feeling as though rates would finish the year below 2.00%.
By comparison, 49% of property/casualty companies that responded shared the same belief; 45% of health insurers felt the same way. Other highlights from the results of A.M. Best’s third quarterly survey include:
- While total bond investments remained relatively stable for the life/annuity sector, the bond portfolio composition has changed with more direct movement into NAIC 2 rated holdings in an effort to gain yield without heading too far down the credit spectrum.
- Emerging market exposure is gaining more importance in well-diversified portfolios given its growing role in the global economy, with this segment expected to eclipse 50% of global GDP before 2020.
- Insurers remain interested in fixed-income or equity-type exposures such as private equity and hedge funds, as opposed to more “real” asset exposures like real estate or infrastructure.
For a full copy of this special report, please visit here .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.