eli5: who or what is profiting from the MASSIVE interest rate rises in Australia? Is it the banks holding your mortgage? The Government?!.. basically, who is loving life right now?
In: 34
Insurance companies receive premiums upfront and owe larger sums at dates far out in the future. Higher interest rates and inflation mean the future value of money declines, consequently reducing the future value of their liabilities. Furthermore, they get higher returns on their holdings that are fixed income.
A good example would be Jackson Financial (JXN on NYSE), an annuity provider. 2019 and 2020 they lost a whopping $13 and $24 per share. In 2021 they returned $31 to shareholders and 9 months into 2022 they returned $71ish (more than 2x the share price).
Insurance companies receive premiums upfront and owe larger sums at dates far out in the future. Higher interest rates and inflation mean the future value of money declines, consequently reducing the future value of their liabilities. Furthermore, they get higher returns on their holdings that are fixed income.
A good example would be Jackson Financial (JXN on NYSE), an annuity provider. 2019 and 2020 they lost a whopping $13 and $24 per share. In 2021 they returned $31 to shareholders and 9 months into 2022 they returned $71ish (more than 2x the share price).
A quick look at the rates online suggest that the rate is around 4.85. I got my first house in 2001 and it was 7.45.
Rates have been lower than all of recorded history and now they return to tree norm and everyone moans.
A quick look at the rates online suggest that the rate is around 4.85. I got my first house in 2001 and it was 7.45.
Rates have been lower than all of recorded history and now they return to tree norm and everyone moans.
Latest Answers