Nothing makes financial markets more skittish than the threat of a rising rate environment. The Fed removed the word “patient” from its statements and though the exact timing of the increase is still up for speculation, an interest rate increase of 0.10% to 0.25% is a certainty this year.
Higher interest rates might not seem like a positive thing for stocks – higher rates mean less money available for investment growth by businesses – but that's not true across all sectors. For life insurers, rising rates mean more profitability.
Life insurance companies must hold a large amount of its assets in liquid form and are subject to strict regulations as to how that money can be invested. Conservative asset classes like bonds, treasuries, and money-market securities are the only types a life insurance company can invest in. Liquidity is a key component of this industry as the company must be able to meet its policyholder obligations when a claim is made. Continue reading "Insure Against The Upcoming Fed Rate Hike"