Quick question: which product’s reserve value is still being calculated with this reference rate?
I have lost track with all the switching to principal-based reserves: income annuities (VM-22) since 2018, term life, universal life, and some variable annuities since last year, etc.
The valuation discount rate for VM-20 net premium reserves is still based on the averages of Moody’s composite yield on seasoned corporate bonds; due to VM-02 referencing VM-20 NPR valuation rates the Moody’s rate also dictates non-forfeiture interest rates for life insurance.
Not the question you asked, but, back in the day, I used to keep track of interest rates for death claims. FL’s rate uses Moody’s, so that’s why I was interested.
These days I’m interested just because I like to keep track of things.
August 2021
2.91
September 2021
2.91
I did a histogram:
It’s in the shared spreadsheet, and it’s of the month-to-month rate changes in bps.
Shared spreadsheet:
October 2021
3.04
November 2021
2.96
Hmmm, any other graphs/stats I should look at?
December 2021
2.97
January 2022
3.25
one of the high percentile month-to-month changes
28-bp increase is 94.5th percentile
February 2022
3.61
WOW, where does a 36 bp increase fall?
So that’s currently at the 96.4th percentile.
March 2022
3.88
April 2022
4.22
we’ve been in the 90+ percentiles for rate increases in the last 4 months
May 2022
4.65
By all measures, 95th+ percentiles for rate change in May 2022
