COVID-19 May Give Life Insurers Q3 Low-Rate Flu: S&P Analysts
May 20, 2020 by Allison Bell
COVID-19 now seems more likely to hurt U.S. life insurers by depressing interest rates than by causing a catastrophic increase in life insurance claims.
Analysts from S&P Global Ratings gave that assessment Tuesday, at a webinar the rating agency organized to review the effects of the pandemic on insurers’ earnings and capital levels.
The analysts produced a chart that 10 large life insurers S&P rates now use base long-term interest rate assumptions ranging from 2.25% to 5%.
Some life insurers are waiting to cut the base interest rate assumptions they use, to reflect falling U.S. Treasury rates, because the rates investment-grade companies were paying on bonds in first quarter were actually pretty high, the analysts reported.