Friday, June 17, 2011

low interest rates threatens insurance companies

The ultra low interest rates in developed countries have caused pain for insurance companies, especially life insurance companies. Most life insurance companies have to invest and reinvest the premiums in long term government bonds. The low interest rate will force them either increase premium or get into riskier investments. None of them are attractive options. The downturn in stock market will also have impact on variable-guaranteed products. 

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