Low Interest Rate Environment Issues Faced by Property-Casualty Insurance Companies

Abstract
The Low Interest Rate Environment Working Party explored issues related to the current environment of historically low levels of interest rates with the purpose of uncovering and communicating potential problems before they occur. There are challenges posed to the property-casualty industry from this new environment, both with regard to income statements (reduced investment income if rates stay low, as well as with the strength of balance sheets) and the market value of fixed income assets, which will drop if rates return to more normal levels. The working party addresses questions related to insurance pricing policy, investment strategy, risks to solvency, use of debt, and long-term impacts, among other issues.

Keywords: interest rates, inflation sensitivity, balance sheets, duration matching

Volume
Summer
Page
1-17
Year
2015
Categories
Financial and Statistical Methods
Asset and Econometric Modeling
Duration
Financial and Statistical Methods
Asset and Econometric Modeling
Inflation
Publications
Casualty Actuarial Society E-Forum
Authors
Christopher Gerald Gross
Denis G Guenthner
William H Panning
Susan E Witcraft