Cove Insight: Industrial Alliance Insurance Announces 2024 SRIA Guaranteed Interest Rate
For Industrial Alliance Genesis IRIS policies invested in the Smoothed Return Index Account (SRIA), the guaranteed SRDA interest rate for 2024 is 2.9%, up from 2.5% in 2023.
The prolonged high-interest rate environment and unstable stock markets continue to impact life insurance policy interest rates for all smoothed-rate accounts. The main factor accounting for the net increase in the credited rate for 2024 is the rise in the company’s long-term return expectations, as a consequence of the recent economic environment and the rise in interest rates.
Industrial Alliance Stabilized Return Index Account (SRIA)
The SRIA fund is managed with a longer-term investment focus, designed to achieve superior returns while minimizing the potential for capital loss within the fund. The portfolio of assets in the funds is comprised of high-quality fixed-income investments such as bonds and commercial loans, with the balance invested in selected equities. The annual SRIA credited rate is determined using a specialized smoothing formula developed by Industrial Alliance. The objective of the smoothing formula is to significantly reduce yield volatility.
As of October 31, 2023, the total asset value of the SRIA was $666 million. As of that date, approximately 72% of the assets were invested in private loans, 23% in high-quality bonds, 3% in common shares, and 2% in alternative assets (essentially mortgages). The average duration of the bonds is approximately ten years.
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