Treasury Yields Rising, Annuity Rates Soon to Follow

One of the main indicators that drive how annuity companies price their products has seen a significant increase lately.  The 10-yr yield increasing to 2.02%, the highest since April 2012.  That’s up from a low 1.39% in July 24th of last year.  US treasuries are not what most insurers purchase to price their products, corporate bonds are.  However, treasuries are a leading indicator of corporate bonds rates and have also seen an average increase of 10-20%.

 

http://www.bloomberg.com/news/2013-02-02/treasury-yields-rise-to-highest-since-april-as-u-s-adds-jobs.html

 

http://www.bloomberg.com/markets/rates-bonds/corporate-bonds/

 

If this trend holds, this should allow many carriers to increase rates on their current annuity products.  And may even give some the flexibilty to bring new products to the market place.

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