US life insurers driven to riskier assets

Low bond yields hurting profitability of insurance products with guaranteed returns

[NEW YORK] THE rock-bottom yields on offer in the corporate bond market are putting pressure on investment returns for US life insurers and driving them into riskier and less liquid investments such as private equity and infrastructure debt, insurers said.

Low rates have hurt insurer investment returns and the profitability of insurance products with guaranteed returns. Life insurers' portfolios, on average, lost 0.8 per cent in 2013, according to SNL Financial. Those weak returns, along with more competition from private pension funds for the supply of US corporate bonds, have prompted US life insurers to consider riskier strategies to provide richer compensation.

"The key focus for us is the...

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