The Federal Reserve announced in December that it will reduce its bond purchasesfrom $85 billion to $75 billion per month, starting the process ofscaling back its massive quantitative easing program. In mid-2013,interest rates headed up as investors anticipated that thistapering would begin soon. Yield on 10-year Treasury notes rosefrom 1.61 percent in May to as high as 3 percent in September. Mosteconomists agree that the tapering program will continue to driverates skyward.

Treasury & Risk sat down with Greg Mateja,a managing director with Alvarez & Marsal and a fellow of theSociety of Actuaries, to discuss how higher interest rates arelikely to affect insurance companies and their customers. What wegot was good advice for every company contemplating the differentways in which tapering of the Fed's bond buying might affect theirbusiness.

T&R: How will the tapering of theFed's quantitative easing program affect insurancecompanies?