WL Dividends - Calling a Bottom?

[scagnt83]

So when do WL Dividends bottom in this increasing rate environment? This year? Next year? 2024?

Im hoping next year will be the bottom. Im not expecting an increase next year, hopefully sustained.

 

[Travis Price]

Between tomorrow and 2034.

 

[marindependent]

I am not a professional investor, but my guess is that Entities that primarily invest in Bonds are going to have a long slog ahead of them with rising rates.

 

[Allen Trent]

So when do WL Dividends bottom in this increasing rate environment? This year? Next year? 2024?

Im hoping next year will be the bottom. Im not expecting an increase next year, hopefully sustained.

Likely awhile & unlike previous cycles, it seems like more carriers have either moved away from dividend rich product designs or will treat inforce business different than new sales......meaning keep inforce dividends lower & come out with better dividend new sales

 

[pfg1]

I hope soon, its definitely been a long slow slide. Some carriers much worse than others for sure. My understanding, the uphill trend moves slower than the slide down so
I guess we'll see. I'll be happy if we just halt the slide.

 

[hunschuld]

in 1992 the 30 year treasury was 7.67% Today it is under 3%. That means every day when bonds come due the insurance companies are reinvesting their money and earning 60% less. The 30 year was still over 4% in 2010. So it is very possible portfolio rates will keep falling for 2 decades more so look for more products based on new money rates and continued less than originally illustrated performance from older products

 

[scagnt83]

in 1992 the 30 year treasury was 7.67% Today it is under 3%. That means every day when bonds come due the insurance companies are reinvesting their money and earning 60% less. The 30 year was still over 4% in 2010. So it is very possible portfolio rates will keep falling for 2 decades more so look for more products based on new money rates and continued less than originally illustrated performance from older products

Interesting take. Lots to ponder in that post.

It would be interesting to go back and see the exact correlation between bond rates and increasing dividends. Not sure what decade they started increasing up until their peak in the 70s/80s.

 

[BNTRS]

in 1992 the 30 year treasury was 7.67% Today it is under 3%. That means every day when bonds come due the insurance companies are reinvesting their money and earning 60% less. The 30 year was still over 4% in 2010. So it is very possible portfolio rates will keep falling for 2 decades more so look for more products based on new money rates and continued less than originally illustrated performance from older products

Life insurers don't invest heavily in Treasuries so using the change in treasury rates to speculate how much their income has fallen is a bit flawed. They much prefer corporate debt. The Moody's index for seasoned Aaa debt is closest to their favorite mix, that's why so many use that index as a basis for setting variable loan rates.

Speaking to Tyler's original question. I wouldn't get my hopes up for at least another 24 months.

 

[marindependent]

using the change in treasury rates to speculate how much their income has fallen is a bit flawed.

Yes, but there are pretty clear similarities between the two rates paid. And frankly unless someone on this forum is going to pull out and review all of the bond durations and interest rates of a given insurer - its not that bad of a simple number to go off of. Perhaps average rates for Corporate Debt?

This is frankly not the bogleheads forum - and you may likely get a better answer there than here.

 

[scagnt83]

Yes, but there are pretty clear similarities between the two rates paid. And frankly unless someone on this forum is going to pull out and review all of the bond durations and interest rates of a given insurer - its not that bad of a simple number to go off of. Perhaps average rates for Corporate Debt?

This is frankly not the bogleheads forum - and you may likely get a better answer there than here.

Brandon posted here a bit before your time. If anyone has tracked the corporate bond stats and compared them to Dividend payouts, its him. He is more analytical than I am.

And yes, you would use average rates. No different than using average Treasury rates. Bond rates, both corporate and Treasury, change daily. You always use averages in that type of situation.

And imo, this forum is a much better venue to talk about this vs. boggleheads. They know very little about WL.