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Open access Aug 2026

Long Rates, Life Insurers, and Credit Spreads

This paper proposes a new channel through which long-term interest rates transmit to credit spreads. When life insurers carry negative duration gaps, higher rates reduce their liabilities more than assets. Rate increases therefore boost equity and risk-bearing capacity, lowering equilibrium credit spreads. Empiricall...

Ziang Li · 1 citation
Preprint Aug 2026

From Long to Short: How Interest Rates Shape Life Insurance Markets

This paper explores how financial institutions pass interest rate risk through to product markets using the life insurance industry as a setting. We show theoretically that it is optimal for insurers to distort product issuance across maturities to offset duration gaps. We examine insurers exogenously exposed to intere...

Ziang Li, Derek Wenning · 0 citations

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