Are Your Insurance Stocks Exposed to High-Yield Corporate Bonds?

The yield on high-yield corporate bonds set a new low last week as investors continue to hunt down returns in today’s low interest rate environment. As prices get lofty, it makes sense for those individuals owning insurance stocks to exam their exposure to the asset class.

According to a screen run by analysts at Barclay’s, both Life and P&C insurers allocate a significant amount of their investment portfolios to high-yield corporate bonds. The average is 3%-4%.

As a percent of book value, life insurers have significantly more exposure than P&C, 22% vs. 8%.

“Of the life insurers we cover Symetra Financial Corporation (NYSE: SYA) (-36%) Unum Group (NYSE: UNM) (35%) and AFLAC Inc (NYSE: AFL) (32%) have the most exposure to high-yield corporate bonds as a percent of book value. Life insurers with the least exposure include Reinsurance Group of America (NYSE: RGA) (9%) The Hartford Financial Services (NYSE: HIG) (10%) and Ameriprise Financial Inc (NYSE: AMP) (10%). Among P&C insurers, ACE (NYSE: ACE) (29%) and Allstate (NYSE: ALL) (24%) have the most exposure,” said Barclays.

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