Updated: December 14, 2015
Who gains the most from the Federal Reserve’s (almost certain) rate hike this week?
Banks are one lucky group: if interest rates keep rising next year—as I expect they will—they’ll reap a windfall on loan interest. (Last week, we looked at my three favorite banks to buy now.)
But there’s another group poised to gain as rates arc higher next year, and hardly anyone has mentioned them. I’m talking about insurance companies.
A Screaming Bargain
There’s a direct link between rising rates and insurers’ profits.
Insurance companies are constantly investing the premiums they collect in, among other things, government and corporate bonds, and yields on those bonds rise with the federal funds rate.… Read more