A.M. BEST SPECIAL REPORT: HOW HAVE JAPANESE LIFE INSURERS COPED WITH ULTRA-LOW INTEREST RATES OVER TWO DECADES?

HONG KONG, April 19 (Bernama-BUSINESS WIRE) -- A new Best’s Special Report states that although the ultra-low level of interest rates would be a negative factor to the insurers’ financial strength in the long term, a repeat of the late-1990s, when some companies became insolvent due to sudden and material changes in financial market conditions, is not expected.

 

The Best’s Special Report, titled, “How Have Japanese Life Insurers Coped with Ultra-Low Interest Rates Over Two Decades?” states that over this two-decade period, rated life insurers have coped with increasing pressure on capitalization by developing more sophisticated risk management tools and adopting a conservative risk appetite by shifting the focus of new sales toward protection-type products, such as traditional death coverage or products with living-benefit features, to achieve stable profitability. Life insurers also have strengthened reserves and lengthened the asset duration to mitigate the liability mismatching risk.

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