What are the risks of investing in stable value?
Although stable value has a long, well established track record of preserving capital, providing liquidity, and generating steady, positive returns, it is important to recognize that all investments have risks.
What is stable value?
Stable value generally refers to a relatively low-risk asset class that focuses on capital preservation and liquidity, while providing steady, positive returns to participants within certain types of savings plans.
What role can stable value play in my savings and investment strategy?
Stable value is usually offered by a plan sponsor in a defined contribution plan as a low-risk investment that focuses on capital preservation and liquidity, while providing steady, positive returns to a plan’s participants.
What are some other aspects of guaranteed insurance accounts that a plan sponsor should consider?
Consider asset ownership, single guarantors, disclosure requirements, fees/spread, and exit terms.
What are the strengths of guaranteed insurance accounts?
In addition to providing an attractive solution to plans and participants seeking stability, liquidity, and yield, guaranteed insurance accounts provide the following benefits:
What risks does the insurer bear for providing the guarantees?
By declaring a rate that can never fall below the guaranteed minimum interest rate in advance, the insurance company assumes certain risks.
How does an insurer take on these risks?
Transferring risk from policyholders to the insurance company is at the very heart of what insurance companies do every day.
What are the differences between general accounts and separate accounts?
Guaranteed insurance accounts can be structured in two ways: general accounts or separate accounts.
How can a plan get comfortable with a single guarantor behind a guaranteed insurance account?
Aside from the fact that any claims related to guaranteed insurance accounts are pari-passu with policyholders and ahead of general creditors, insurance companies are highly regulated with rigorous risk management and oversight processes.
