The Federal Reserve has raised interest rates since last year, and it recently announced its tenth-rate hike of 25 basis points, taking the federal funds rate to a range of 5% to 5.25%, the highest since August 2007. Insurers benefit significantly from rising interest rates as their underlying bond investments yield high returns.
Although the Fed has signaled that there could be a pause in rate hikes, it is unlikely to cut interest rates this year. Therefore, it could be wise to buy fundamentally strong insurance stocks, Everest Re Group, Ltd. (RE), Reinsurance Group of America, Incorporated (RGA), and International General Insurance Holdings Ltd. (IGIC).
