Lincoln National Corp. (LNC) led a decline among life insurers as Treasury yields fell the most in five months after President Barack Obama was elected to a second term.
Lincoln fell 5 percent to $24.52 at 10:03 a.m. in New York, the most intraday since June for the Radnor, Pennsylvania-based company. MetLife Inc. (MET), the largest U.S. life insurer, dropped 3.5 percent to $33.08. All 24 companies on the KBW Insurance Index (KIX) retreated.
Treasury yields declined as Obama’s re-election bolstered speculation the Federal Reserve, led by Chairman Ben S. Bernanke, will continue buying bonds to support the economy. The 10-year Treasury yield fell 12 basis points to 1.63 percent.
“A prolonged period of low interest rates is bad for insurers, resulting not only in lower investment earnings and profit compression on spread-based products, but also higher reserve increases and meaningful writedowns of goodwill,” Neil Strauss, a senior credit officer at Moody’s Investors Service, wrote in a Nov. 5 research note.
The Fed has said it will keep interest rates low through at least the middle of 2015, and announced a program in September to buy $40 billion a month of mortgage-backed securities. Mitt Romney, the Republican candidate, had said he wouldn’t reappoint Bernanke when his term ends in 2014.
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