Author Topic: Is life insurance, pensions, annuities and the like at risk?  (Read 2638 times)

Online CountValentine

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Is life insurance, pensions, annuities and the like at risk?
« on: March 23, 2020, 02:15:13 PM »
Should we be worried about these going bust? Anything we can do at this point?

I know we have members in these fields and would like to here their view.
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Offline ari3

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #1 on: March 23, 2020, 02:46:24 PM »
I would think even in this financial environment it is unlikely that life insurance companies will go bankrupt. (Even if they had to pay out for many deaths they have reinsurance). Even if they do go bankrupt I think you would still recover most of your money (reserves etc). 
Pensions would be dependent on the health of the company standing behind the pension. (obviously if it is not a defined benefit pension you would be affected by the markets decline regardless).
Annuities would also depend on the strength of the issuer (not the agent that sold it to you but the actual issuer) and I would think that stable financial companies that wrote annuities aren't going bankrupt.
During the 2008 financial crisis the government bailed out the financial companies that were failing and overall the large financial companies are much healthier today.

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #2 on: March 23, 2020, 02:52:41 PM »
What would be your view on MetLife? Have a large annuity with them.
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Offline ari3

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #3 on: March 23, 2020, 03:49:21 PM »
What would be your view on MetLife? Have a large annuity with them.
Before the current crisis Metlife had a rating of A plus which is very high so I wouldn't be concerned about them. Metlife no longer writes annuities. Since 2017 annuities with the Metlife name are actually written by Brighthouse financial (a company spun out from Metlife). They also are rated very highly. If your annuity was purchased before 2017 it may still be with metlife.
If it is a variable rate annuity you will still be affected by the markets drop.

Online CountValentine

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #4 on: March 23, 2020, 03:53:31 PM »
Appreciate the info. It was in 2017 but still MetLife. Fixed, 10 year certain with cash value.
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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #5 on: March 23, 2020, 04:53:36 PM »
Mortality is not significant enough with this to have any effect. Instability in the financial markets will have some effect, but I doubt it'll be enough to bring anyone down. Policies (both annuities and life insurance) that have non-guaranteed elements may see changes in rates reflecting the current environment.

Online AsherO

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #6 on: March 23, 2020, 05:23:47 PM »
I know we have members in these fields and would like to here their view.

Paging @ExGingi
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Online CountValentine

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #7 on: March 23, 2020, 05:28:46 PM »
Paging @ExGingi
I am hoping he chimes in but so far what is being posted is what I have been hearing.
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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #8 on: March 23, 2020, 05:29:55 PM »
Mortality is not significant enough with this to have any effect. Instability in the financial markets will have some effect, but I doubt it'll be enough to bring anyone down. Policies (both annuities and life insurance) that have non-guaranteed elements may see changes in rates reflecting the current environment.
I was thinking the economy would be the issue.
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Online ExGingi

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #9 on: March 23, 2020, 05:31:42 PM »
Mortality is not significant enough with this to have any effect. Instability in the financial markets will have some effect, but I doubt it'll be enough to bring anyone down. Policies (both annuities and life insurance) that have non-guaranteed elements may see changes in rates reflecting the current environment.
+1

I was on a conference call of a major mutual life insurer last week. While obviously each company is different, where it comes to guaranteed mortality assumptions, they use the Spanish Flu for calculations. Having that kind of tragedy would mean a 50% increase in mortality, or an extra 1.5 million deaths as a result. Given the age distribution of insureds, etc. they gave the potential impact on reserves which would be miniscule.

The biggest impact is the low interest rate environment.

ETA: Japanese insurers have been operating well under zero rates for a long time. I wouldn't worry about an existing contract with guarantees. Just don't let yourself to be talked into giving up those guarantees (when it comes to Variable Annuities, which I don't think is what you have, most people simply don't know or understand the contract).
« Last Edit: March 23, 2020, 05:44:15 PM by ExGingi »
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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #10 on: March 23, 2020, 05:42:22 PM »
+1

I was on a conference call of a major mutual life insurer last week. While obviously each company is different, where it comes to guaranteed mortality assumptions, they use the Spanish Flu for calculations. Having that kind of tragedy would mean a 50% increase in mortality, or an extra 1.5 million deaths as a result. Given the age distribution of insureds, etc. they gave the potential impact on reserves which would be miniscule.

The biggest impact is the low interest rate environment.
My company actually put out a post on our intranet about how we responded/fared in 1918. Strong reserves go a long way.

As far as the interest rate environment, most companies run simulations of all sorts of crazy rate environment scenarios - pandemic is literally on that list. I'm not saying everyone does this, or that everyone sets up their business to skate through every scenario easily, but it's not some sort of unthinkable scenario for most.

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #11 on: March 23, 2020, 05:46:44 PM »
My company actually put out a post on our intranet about how we responded/fared in 1918. Strong reserves go a long way.
Are reserves public knowledge?
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Offline haltkup

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #12 on: March 23, 2020, 06:01:32 PM »
Most highly rated life/health/PC companies came into this scenario well capitalized and will weather the storm just fine. I am hearing a issues about some annuities that are taking big hits. Due to the low interest environment they chased yield by investing in BBB IG corps and structured assets which are now causing significant paper loss and with the risk of impairment and high probability of being downgraded to HY its causing them to liquidate at significant losses.

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Re: Is life insurance, pensions, annuities and the like at risk?
« Reply #13 on: March 23, 2020, 06:02:43 PM »
Are reserves public knowledge?
Yes. Filed with insurance departments in all states where insurer is licensed. Often found more easily on company annual reports.
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Offline ari3

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