NU Online News Service, June 2, 2003, 5:59 p.m. EDT — New York
Maurice “Hank” Greenberg, chairman of American International Group Inc., New York, says some life insurers might stop writing annuities in states that fail to lower minimum annuity interest rate guarantees.
Greenberg appeared here today with other life insurance company chief executives in a panel discussion organized by Standard & Poor’s Rating Services, New York.
Greenberg and the other executives agreed that the U.S. economic system is better equipped to handle the kind of prolonged low interest rate environment now confronting life insurers in Japan.
The situation in Japan has not changed much in the past 10 years because officials there have been unwilling to look at structural problems, and companies have been slow to recognize the bad assets on their balance sheets, the executives said.
Greenberg said U.S. life insurers can take some steps on their own to guard against continuing low rates, by cutting the minimum rates that they offer and introducing new products designed with the new, low rates in mind.
“You don’t have to be a victim of interest rates if you know your own business,” Greenberg said.
But Greenberg and the other executives also agreed that U.S. life insurers need some help from the states to cope with the new interest rate environment.
More state legislatures and insurance regulators should lower minimum interest rate guarantees, the executives said.
Forty states have approved a reduction in the minimum rate guarantees, but there are still some states that are not allowing an adjustment downward, according to Ramani Ayer, chief executive of Hartford Financial Services Group Inc., Hartford.