Continuing low interest rates have prompted life insurers to add credit risk to their portfolios, a shift that has boosted assets but negatively impacted investment income.
Conning discloses this finding in “Life Insurance Industry Investments: Added Risk in 2013.” Exploring strategic issues facing life insurers, the report focuses on major asset classes, investment trends and portfolio results for 430 insurers, the companies grouped by business focus (life, annuities, accident and health, mixed, and reinsurance.) Conning also investigated differences among insurers in terms of allocation and investment results, showing the effects of differences in size and choices in allocation among asset classes.
“In 2013, the life insurance industry saw some possible relief as long-term interest rates rose,” the report states. “However, the long period of decreasing rates to historical lows has taken its toll on investment results for the industry, even with the small respite.