Lincoln National Corp. was among U.S. life insurers that declined as bond yields fell after employers added fewer jobs than forecast.
Lincoln dropped 4.2% to $30.10 at 9:59 a.m. in New York on Friday. MetLife Inc., the largest U.S. life insurer, lost 3.7% and No. 2 Prudential Financial Inc. slipped 3.6%.
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 seven basis points, or 0.07 percentage point, to 1.69%, as bond prices gained 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 says.
Hartford dropped 4.2% and New York-based AIG lost 1.6%. Aflac Inc. slumped 3.2%.
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 Friday.
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