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Moody's: LTCI could have miserable company

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Insurers have been talking more about the effects of low interest rates on long-term care insurance (LTCI) operations, but the rates are also hurting other operations.

Analysts at Moody’s Investors Service have discussed the effects of low rates in a commentary on the current state of the U.S. life industry. 

The analysts are predicting that tight consumer budgets will constrain life product sales as low rates and volatile stock prices hold down life insurer profits.

Life insurers depend on investment portfolio earnings to maximize profits in many lines of business.

In addition to LTCI products ad long-term disability insurance products, the low rates are hurting the performance of annuities with long-term guarantees, such as payout annuities; old blocks of individual fixed annuities with high guaranteed rates; universal life products with embedded interest rate guarantees; and variable annuities with interest-sensitive guarantee features, such as guaranteed minimum withdrawal benefits, the analysts said in the commentary.

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