Interest Rate Swap
Definition of "Interest rate swap"
Contractual agreement between two parties in which they agree to exchange a stream of interest payments on either a fixed rate for a floating rate or a floating rate for a fixed rate. The insurance company is most likely to select a floating rate for a fixed rate because it needs to know exactly what it will be paying in future interest. In this way, the insurance company can hedge its interest rate exposure (risk that interest rates will rise or fall at some stipulated time), reflected by changes in the value of its assets on the balance sheet.
Popular Insurance Terms
Direct payment to a new custodian for a retirement plan. This payment is not a taxable event since it is not a distribution. The payment must be between like plans; for example, one ...
Same as term Commutation Right: right of a beneficiary of a life insurance policy to exchange the future installments due that beneficiary for a lump sum distribution. ...
Type of flexible spending account. ...
Language in the insurance policy that can be considered unclear or subject to different interpretations. Under these circumstances, the courts have generally ruled in favor of insured ...
Publication stipulating underwriting rules applicable for a given line of insurance, classifications of exposures within that line of insurance, and premium rates per classification. For ...
Plan in which funds are currently allocated to purchase retirement benefits. An employee is thus assured of receiving retirement payments, even if the employer is no longer in business at ...
Sum total of all assets owned by the decedent to include personal property, real property, and trust property. ...
Bulletin issued June, 1993, with disclosure requirements that strongly suggest that insurance companies establish reserves or add to current reserves for asbestos and environmental risks to ...
Insurance company whose corporate charter and bylaws prevent assessment of its policyowners, regardless of how adverse its loss and expense experience may become. ...
Have a question or comment?
We're here to help.