What History Says About Insurance Stocks When Bond Yields Rise

Bond yields had been rising before Kevin Warsh's Fed went into its most recent meeting. That indicated Wall Street expected a hike, despite Warsh materially reducing guidance to investors. When the Federal Reserve meeting ended, Warsh announced a quarter-point increase. If you own an insurance company, this is good news. But it is also bad news. Here's what you need to know. What do insurance companies do? Insurance companies collect premiums up front. They hold that cash, known as the float, until their customers make claims. While an insurance company has the float, it can invest it. Different insurance companies handle the cash differently.