M Partner Due Care Bulletin

In this special edition of M Financial’s Due Care Bulletin, we present economic factors to consider when evaluating the financial health of life insurers and summarize carrier news and commentary.

KEY CONSIDERATIONS

  • To maintain sound business and comply with regulatory guidelines, carriers use multiple conservative stress-tested assumptions.
  • Because of the COVID-19 pandemic, we should expect economic conditions to worsen before they get better. Methods being used to combat the spread of COVID-19 are effectively furloughing entire industries, and some industries may be altered dramatically.
  • In an effort to prevent a complete economic meltdown, the Federal Reserve has reduced the interest rates on various types of short-term borrowing to a range of 0.00% to 0.25% and signaled its intention to authorize unlimited purchases of Treasury and mortgage securities. This level of quantitative easing may increase credit spreads as Treasury rates increase, which will be a boon to insurer portfolios.