Part of a chat with my friend:
“....What I am worrying about is the economic damages caused by the pandemic and governmental shutdown could be worsen by these riots. Both of these can make the insurance company loss a lot recently. By the estimate of the Financial Times, the number could be up to at least $200 bn.
I’ve written another article talking about that the most US insurance companies hold a lot of CLOs (Collateralized Loan Obligation) which are too dangerous for them. But for the past decade, Fed has executed its policy to drive the market interest rate very low, which make most insurance companies or wealth management funds to take higher risk for returns. The pandemic and shutdown have caused the return rate of CLOs climbed, which means decrease of the value of the assets held by these companies. On the other hand, the damages of the retails and other businesses could increase insurer’s payments in claims. Decreasing in assets and increasing in payments, in a worst-case scenario, could brew a massive bankruptcy of insurance companies and lead to another financial crisis, just like what had happened in 2008 cause by collapses of CDOs.
you may read the other article at
https://bit.ly/3dxqMKI
BTW, thanks for your kind invitation and we definitely will visit you and your husband in Boston.“
