Covid recession makes US insurers’ junk bond piles riskier

The severe recession sparked by the coronavirus pandemic has caused the creditworthiness of US insurers’ high-yield bond portfolios to deteriorate, which may pump up their risk-based capital requirements.

As of end-2019, insurers held $227.5 billion of junk-rated debt, data from the National Association of Insurance Commissioners (NAIC) shows. Of this, about 59% was designated NAIC 3, which covers bonds with an S&P credit rating of BB+ to BB-.

The shutdown of the US economy following the

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