Undue Alarm: Municipal Bond Investments by P/C Insurers

This PowerPoint presentation by Steven Weisbart, senior vice president and chief economist of the Insurance Information Institute, reviews the place of municipal bonds as investments for property/casualty (P/C) insurers. The report notes that people are wondering how safe investments in state and local government bonds are as many states’ and localities’ tax revenues have plunged from the “Great Recession” while at the same time, they are facing higher spending. The report also discusses increasing concerns about the safety of these bonds as their prices have fallen. A description is provided of the different characteristics of the two types of municipal bonds: general obligation bonds and special revenue bonds. Finally, the presentation shows that municipal bonds are a small part of P/C insurer investments and that they default rarely.