2013 0501 - Des Moines Register - Aviva USA life insurance unit to be dealt to Global Atlantic, by Victor Epstein - [link-winkintel]
2013 0928 - Des Moines Register - Insurers, Banks Hail Higher Bond Yields, By Victor Epstein - [link]
2013 0928 - Des Moines Register - Insurers, Banks Hail Higher Bond Yields, By Victor Epstein - [link]
The risk for insurers and banks is that a too rapid increase in interest rates could undermine the prices of the older bonds in their portfolios too quickly.
That’s one of the reason they prefer a gradual increase in rates.
A steep increase could also prompt holders of older insurance annuity policies to take a dim view of the rates they’re receiving, said Terri Vaughan, former head of the National Association of Insurance Commissioners.
“A gradual interest rate increase is positive,” Vaughan said.
“A very steep rise would tend to cause policyholders to look at other opportunities, increasing policy surrenders.
I can’t say how steep is too steep, but we went through this in the early 1980s (and) some companies had quite significant surrenders.”