by Mike ‘Mish’ Shedlock
One of the little-discussed consequences of low and negative rates is the impact they have on the viability of insurers, especially long-term care insurers.
Insurers sold policies long ago expecting to invest proceeds in high-grade corporate bonds yielding a respectable 7.5% or more. Thanks to central bank policies, bond yields are in the gutter.
In February, Standard & Poor’s downgraded Genworth’s life-insurance units to junk, citing reduced profitability. Met-Life stopped selling long-term care policies altogether.
Will your insurer even be in business when the time comes for you to collect?