US P&C insurers’ average investment yield to climb to 3.5%

Written by Adam Cadle

19/04/2023

The average investment yield for US P&C insurers is expected to climb to 3.5% in 2023 and 3.7% in 2024 as recurring yields continue to rise, according to Swiss Re.

In 2022, Swiss Re said portfolio yields were low (2.7%), largely due to negative realised capital gains, however an improvement in capital gains by the end of 2023 is expected.

“Despite a decline in reinvestment yields in Q123, they remain comfortably above rates on maturing securities,” Swiss Re said.

“We estimate the 2023 reinvestment yield at 5.2%. We forecast one more quarter-point rate increase to bring the upper bound of the Fed funds target range to 5.25% this year before ending next year at 3.75%, and the 10-year Treasury yield at 3.7% and 3.2% in 2023 and 2024.”

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