Low Interest Rates Affecting Insurance Companies
The ultra-low interest rates that exist at the moment are affecting insurance company profitability and operations. On the profitability side, current policy premiums must be reinvested into bonds that have low yields and are fully priced. Investment income and underwriting profitability (which is often rare) are the main components of insurance company profitability. As large fixed income investors, insurance companies are challenged in the current interest rate environment. On the operations...
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