Rising Treasury Yields Benefit Life Insurers' Investment Income
What happened
Life insurance companies are benefiting from rising yields on 30-year Treasury bonds by reinvesting premiums collected. Because these companies manage their assets conservatively to meet long-term liabilities, rising rates are largely viewed as positive for the industry.
From fool.com
Why it matters
Life insurance companies assume financial obligations that can extend for decades, requiring conservative investment strategies. Rising yields increase the reinvestment income generated by these holdings, which helps the companies ensure they have the capital to meet their long-term commitments.
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Who's involved
- MetLifeAmerican insurance holding company benefiting from rising yields
- AlicoAmerican business acquired by MetLife in 2010
- Brighthouse FinancialAmerican financial services company established as a spin-off from MetLife
- Cynthia SmithResearcher who previously held a leadership role in MetLife's Group benefits business
- Michel KhalafPresident and CEO of MetLife, Inc.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- MetLifeSpeculative
MetLife could see its investment income increase and its liabilities decrease due to rising yields on Treasury bond holdings.