“I believe were at the bottom and that well pull out of it in the third quarter.”
Those hopeful words about the U.S. economy gave an upbeat start to the third annual annuity conference jointly sponsored by LIMRA International of Windsor, Conn., LOMA of Atlanta, and Society of Actuaries of Schaumberg, Ill.
Peter Ricchiuti, finance professor and director of research at the A.B. Freeman School of Business at Tulane University, New Orleans, said the stock market is “way undervalued” and is “about as cheap as it was in 1982.”
The nation is “poised for recovery,” he concluded after citing various indicators from his own research and that of his students.
That is important news for people everywhere, Ricchiuti said, explaining that “with the growing free market capitalism around the world, you need to have people have ownership in something, an equity stake.”
No one, he added, “has been known to wash a rented car.”
The audience laughed at the joke, but conversations and presentations later in the conference indicated many are hoping Ricchuitis prediction is correct.
The protracted stock market downturn has made for difficult times at many variable annuity companies, the executives said. Likewise, the ongoing low interest rate environment has made it difficult for some fixed annuity insurers to credit more than their policies 3% guaranteed minimum interest rate.
Congress is looking at various financial issues, noted Randy Hardock, a partner in the Washington, D.C., law firm of Davis & Harman, LLP. However, he said, “no one knows what will happen. All you can do is spot trends, and over time these will lead to results.”
One trend legislators will need to contend with is the aging nation, he said. Baby boomers are fast approaching retirement, he explained, and people are living longer in retirement. These trends are already burdening social programs like Medicare and this will continue, he said.
Today, he noted, 30% of voters are over age 50, and that number will grow in the future. Since a greater percentage of older voters than younger voters actually do vote, “boomers will become a more powerful constituency” in coming years, he predicted.