Life Insurance Stocks Rally On Jobs Report

March 11, 2013

By Robert Dixon

InsuranceNewsNet

Stocks of life insurance companies finished a big week in the markets with a rally last week following a U.S. jobs report that was better than expected and which lent credence to investors' hopes for a rebounding American economy.

Shares of MetLife rose 4.9 percent, ending the week up 10.5 percent. Lincoln National was up 4.3 percent and Prudential Financial was up 2.4 percent. Lincoln gained 10.7 percent for the week and Prudential finished up 8.4 percent.

Market watchers attributed to the strong showing to a Friday payrolls report from the U.S. Department of Labor that showed unemployment falling to 7.7 percent—its lowest level since December of 2008—from 7.9 percent a month earlier.

The report, from the Bureau of Labor Statistics, stated that the U.S economy added 236,000 jobs in February. In a post on the White House blog, Alan Krueger, chairman of the Council of Economic Advisors, wrote that “while more work remains to be done, today’s employment report provides evidence that the recovery that began in mid-2009 is gaining traction.”

The White House pointed out that the jobless figures don't account for cuts to government spending as a result of the so-called sequester.

The improving jobless rate caused the yields on U.S. Treasury bonds and notes to rise with the yield on the benchmark 10-year note up five basis points to 2 percent at the market's close. Higher yields affect life insurers because they hold large amounts of fixed income securities in their investment portfolios. Low interest rates since the financial crisis have dampened insurers' investment income.

“Rising yields are very attractive to insurance companies, pension funds and those needing duration,”Adrian Miller, director of fixed-income strategies at GMP Securities, told Bloomberg.

Shares of the largest U.S. life insurers had already risen this year ahead of broader stock market gains. Friday's rally in insurance stocks showed how sensitive these companies' shares are to rising interest rates: the broad market S&P 500 Index rose just 0.5 percent on Friday.

© Entire contents copyright 2013 by InsuranceNewsNet.com, Inc.  All rights reserved.  No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com. Contact the editor at editor@insurancenewsnet.com with any comments.


Comments

Comment on this article

Name:

Location:

Comment:

A new balance of performance potential and a level of protection. Allianz Index Advantage Variable Annuity.

Featured Offers

Partner with a Carrier with consistent and long-term value for you and your clients

American Equity offers competitive commissions, income payments, exceptional service and more.

Don’t put your practice at risk with a gap in coverage

Get instant E&O at a great low price. [Check out our FREE VIDEO on why you should have E&O.]

The 3 most common ages to trigger Social Security are wrong

Save your clients from reducing their benefits forever! Watch this 3-D VIDEO.