Q: What headwinds could these companies face given a higher interest rate scenario and maybe some mismatch L/A..or possible loan loss provisions?
5i Research Answer:
Certainly a mis-match in liabilities vs assets would be a headwind, like those experienced by the US regional banks. But insurance companies typically match their liabilities very well, and benefit as rates rise (as claims do not correlate that well with rates). Interest income on surplus assets rises with rates of course. Insurance companie also do not have the same risk of deposit runs that banks do. Inflation (primarily labour) may continue to be a headwind.