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Life Insurers Slump as Bond Yields Fall on U.S. Jobs Data

MetLife Inc., the largest U.S. life insurer, lost 3.7 percent. Photographer: Scott Eells/Bloomberg
MetLife Inc., the largest U.S. life insurer, lost 3.7 percent. Photographer: Scott Eells/Bloomberg

April 5 (Bloomberg) -- Lincoln National Corp. was among U.S. life insurers that declined as bond yields fell after employers added fewer jobs than forecast.

Lincoln dropped 1.7 percent to $30.87 at 4 p.m. in New York. MetLife Inc., the largest U.S. life insurer, slipped 2.2 percent and No. 2 Prudential Financial Inc. lost 2.6 percent.

Low yields pressure investment income at life and health insurers, which hold more than $2 trillion in bonds to help back obligations on policies. Yields on 10-year Treasuries fell six basis points, or 0.06 percentage point, to 1.70 percent, after the unemployment report fueled speculation the world’s biggest economy is slowing.

“Sustained low interest rates present a challenge for life insurers because of reduced reinvestment rates,” Jay Gelb, an analyst at Barclays Plc, said in a note to investors on April 2. Radnor, Pennsylvania-based Lincoln, Hartford Financial Services Group Inc. and American International Group Inc. are the large life insurers “most exposed,” he said.

Hartford dropped 2.6 percent and Aflac dropped 3.9 percent. New York-based AIG climbed 2.5 percent.

U.S. payrolls grew by 88,000 workers, the smallest gain in nine months and less than the most-pessimistic forecast in a Bloomberg survey, Labor Department data showed today.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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