The damaging trend of low interest rates

Although interest rates have risen a bit from their historic lows of recent years, insurance company investment portfolio yields are still painfully low. Overall portfolio returns are 100 basis points or more under where they were a few years ago. More distressing, insurers now face the disheartening task of replacing maturing bonds that yielded 5 percent to 6 percent with newly issued securities yielding 2 percent to 3 percent. Declines of 300 basis points from old to new bonds are therefore not uncommon.