OREANDA-NEWS. Fitch Ratings has released a special report analysing trends in U. S. life insurers' net investment income.

The protracted low interest rate environment remains a challenge for life insurers. With the 10-year U. S. treasury note well below 2% and tight corporate bond spreads, Fitch expects a continued decline in life insurers' portfolio yield over the next 12-18 months.

One of Fitch's primary concerns in the low rate environment is life insurers over-reaching for yield by increasing exposure to higher risk assets. While the industry has been increasing asset allocation to private asset classes, including alternative investments, private placements and commercial mortgages, exposure to risk assets has been largely consistent with prior years and below long-term averages, which Fitch views positively.