Life Insurers' Fixed-Income Investment Portfolios Are Diversified, but Exposed to Asset Quality Erosion

The protection measures to contain the Coronavirus Disease (COVID-19) pandemic are severely affecting global economic activity as most countries expect to record negative GDP growth in 2020. DBRS Morningstar's updated global macroeconomic moderate scenario now includes weaker data for 2020 and assumes that a recovery takes somewhat longer. This significant slowdown in economic activity, which is also causing extreme market volatility, has increased credit risk for life insurers' fixed-income investment portfolios.