Mary Pat Campbell’s Woo Hoo Moment

You could hear the excitement in the voice of Mary Pat Campbell, a veteran insurance industry analyst. She was as excited as I’ve ever heard her in the past three years covering the life an annuity industry for InsuranceNewsNet.

As we spoke on Wednesday about her recent report on the life industry’s search for yield by shifting to higher risk bonds, the Federal Reserve announced it was hiking its short-term benchmark interest rate by a quarter percent.

It was the second rate increase by the Fed in two years, after keeping rates at rock bottom for nearly a decade.

Campbell, vice president of insurance research at Conning & Co. in Hartford, Conn., was ecstatic.

“Better than nothing,” she told me. “I wasn’t expecting them to move any faster than that. My goodness, that’s amazing.”

I’ve never heard anyone get so excited about a 25-basis point movement in interest rates.

But now, anyone who tells me the insurance industry is filled with boring, soulless folks, I’m going to jump to their defense.

“Let me tell you about Mary Pat Campbell on Dec. 14, 2016 ...," I'll begin.

But back to Mary Pat.

She and her analyst peers around the country and in insurance companies are going to be scrambling to rework their numbers as higher rates eventually translate into higher yields generated by insurance company investment portfolios.

As for higher crediting rates on variable insurance products and annuities, advisors are going to have to wait a bit more as insurers let their older bonds roll over before insurers invest in higher yielding ones.

Campbell estimates the industry will really begin to see a difference in two or three years.

Higher rates mean there’s a lot in the works for life insurance companies and annuities. Advisors who are interested in what higher rates mean, why not listen in on the 2017 outlook calls scheduled by Prudential today (Thursday) and Met Life tomorrow (Friday).

I plan to and I suspect I’ll be able to intimate some excitement in the voices from the captains of the life insurance industry, even if they are not quite as animated or excited about the rate hike as Campbell was when we spoke.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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