LOS ANGELES (AP) – Shares of insurance companies were mostly trading lower on Thursday, a day after the Federal Reserve predicted low interest rates through late 2014.
Low rates often make it difficult for insurers to pay consumers the higher rates guaranteed in insurance contracts, such as annuities and universal life policies, which the companies sold earlier.
On Wednesday, the Federal Reserve said it plans to keep interest rates extremely low until late 2014 to encourage lending and investment and support the economic recovery.
The Fed may also start buying up more bonds to drive long-term rates lower. That could make mortgages and other loans more attractive to consumers, but it's not good news for insurers and other companies that invest heavily in bonds.
Last month, Fitch Ratings forecast that insurers' earnings and investments would be under pressure this year due to low interest rates, increased hedging costs and market volatil ity.
Among the insurers, Lincoln National Corp. led the sector decline, with shares down $1.27, or 5.8 percent, to $20.67 in afternoon trading on Thursday.
Bucking the trend was Assurant Inc., which rose 23 cents to $39.70.
Elsewhere in the sector:
- MetLife Inc. declined $1.62, or 4.5 percent, to $34.33.
