Low Interest Rate Environment

  • MetLife’s strategy of shifting our product mix toward less interest-sensitive products has helped mitigate the impact of a low-rate scenario.
  • However, if interest rates remain low indefinitely, it would likely be difficult to sustain our 2014 operating ROE of 12 percent over the long term. 
  • This is not a MetLife-specific challenge.
  • Maintaining current return targets in a long-term low rate scenario would likely be a challenge for most businesses, particularly those in the financial services industry.

2014 - MetLife Annual Report 

  • The low interest rate environment poses a significant challenge for life insurers with sizable blocks of liabilities incorporating embedded interest rate guarantees, such as annuities or universal life insurance policies.
  • The industry has reduced its minimum guarantees over time, but products sold when interest rates were higher represent a continue drag on profits.
  • The share of life and annuity product account values subject to a minimum guaranteed rate of return of 5 percent or higher fell from 20 percent to 10 percent over the 2006-2010 period, but more than 40 percent of account values were still subject to a minimum guaranteed rate of return of 3.5 percent or higher in 2010.

2012 - FSOC - Annual Report - 225p