MetLife Leads Insurer Rally as Rates Climb on Jobs Report
MetLife advanced 4.9 percent to $39.03 at 4 p.m. in New York, the highest close in almost a year. Lincoln National Corp. added 4.3 percent and Prudential Financial Inc. rose 2.4 percent.
Interest rates near record lows have pressured income at life insurers, which invest funds from policyholders in bonds and other assets to back future payouts. Yields on 10-year Treasuries reached an 11-month high today, after the jobless rate dropped to 7.7 percent in February from 7.9 percent a month earlier, boosting confidence that the U.S. economy is gaining strength.
“The degree to which the jobs number came in was higher than any expectations and that has smacked the rates market pretty hard, sending rates sharply higher,” said Adrian Miller, director of fixed-income strategies at GMP Securities LLC in New York. “Rising yields are very attractive to insurance companies, pension funds and those needing duration.”
MetLife is the largest U.S. life insurer. The New York- based company has a $517 billion portfolio that includes more than $370 billion of bonds.
Ten-year Treasury note yields added six basis points to 2.05 percent at 4 p.m. and rose as high as 2.08 percent.
Yields fell below 1.4 percent last year and averaged about 2.9 percent over the past five years. Federal Reserve stimulus measures have kept yields on bonds near record lows as policy makers work to revive the U.S. economy.