Shares of MetLife Inc. and Lincoln National Corp. led a rally among U.S. insurers Friday, on investor hopes that rising Treasury yields will improve investment income in their bond portfolios.
MetLife, the largest U.S. life insurer, jumped 5.4 percent to $50.14 at 4:03 p.m. in New York, the biggest increase in three months. No. 2 Prudential Financial Inc., based in Newark, New Jersey, climbed 3.8 percent.
The 10-year Treasury yield rose 15 basis points to 2.75 percent after the Labor Department said the economy added more jobs in October than forecast. The report boosted speculation that the Federal Reserve may announce a reduction in bond buying as soon as next month. The Fed’s purchases pushed yields down, pressuring businesses in which insurers offer fixed returns to clients and seek to earn a better rate on investments.
“Higher interest rates are reducing the headwind of spread compression,” Randy Freitag, the chief financial officer of Lincoln National Corp., said in a conference call last week.
Lincoln climbed 5.7 percent. The Radnor, Pennsylvania-based insurer has rallied about 88 percent this year, compared with gains of 52 percent at New York-based MetLife and 63 percent at Prudential.
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