Forum Topics Bond price implications for stocks
Chagsy
one year ago

Question

do the collapse in bond prices create a risk for companies like insurers ?

as I understand it, insurance companies supposedly benefit from pre-payments on policies that they then earn interest on. If this is placed in cash instruments then presumably they are fine, but if this is placed in “safe” government bonds then they are exposed to the same risks that have troubled international banks. I presume that the domestic market is less troubled by this than international markets.

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edgescape
one year ago

Think it will most likely affect life policies but have to look up my course notes and questions again on immunisation and duration!

Those are pretty complicated subjects to understand. But if you look up what immunisation is there should be a fair bit of material on it and perhaps how rates would impact cashflows to meet liabilities.

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