Insurance stocks rally as bond yields climb

March 13, 2013 by AP Staff Writer

BOSTON (AP) – Shares of life insurance companies rallied to 52-week highs Friday as a surprisingly strong jobs report pushed bond yields to their highest levels in nearly a year.

Insurance companies are major institutional investors in bonds, investing funds from policyholders’ premium payments and using the proceeds to pay out future claims and generate profits.

But the Federal Reserve’s policy of keeping short-term interest rates near zero to stimulate the economy has sharply reduced bond yields in recent years, pressuring the ability of insurers to generate strong investment returns. Click here to read…

Originally Posted at LifeHealthPro on March 8, 2013 by AP Staff Writer.