August 8, 2016

Life Insurance companies seriously exposed to central banks easing policies

With the Bank of England easing monetary policy Thursday, I'd like to point out that life insurance is the most-exposed sector to lower rates. (The second-most-exposed one is banking).

Frankly, the "float" ain't what it used to be for insurers, while reinvestment opportunities have become meager and dwindling.

Partly as a result, MetLife and Prudential reported big earnings misses after the close Wednesday night and are paying the price for it now.

As a reminder, MetLife (MET) and Lincoln National Corporation (LNC) are both on my "Best Short Ideas" list. So is Geico parent Berkshire Hathaway (BRK) , although that stock has held up for now.

Conversely, I remain long on Hartford Financial (HIG) . In fact, I've recently added to my position in the stock.

Position: Long HIG, Short BRK.B, MET (small), LNC (small).


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