Debt Ceiling Issues May Affect Insurance Markets

The current discord over the debt ceiling between the President and the Speaker of the House is proving to be a complicated mess. There is no real easy short term answer to the problem. The Fed is spending to much and living beyond it's means. Adding more debt is not the solution, good common sense will tell you that. Insurance company Execs are really looking at this closely. To adequately begin solving the problem, the investment markets will be in turmoil for a while. As interest rates go up ( and they have to) bond yields will go down. In addition the rating of held bonds by insurance company portfolios may be affected. This could drive insurance companies to move their investments out of "secure" bonds and into more "speculative" securities. This strategy could put insurance companies a little behind the "8" ball as they have depended on investments , not underwriting, to make a profit. Lets see how this will play out. Until next time be careful out there and know your risks.  K

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