The 30-year US Treasury yield touched 5.33% intraday around August 18, its highest level since June 2007. Life insurers like Prudential hold over 85% of their roughly $450 billion investment portfolios in fixed maturities and mortgages. Every bond maturing is being replaced with new securities paying dramatically more: a bond purchased in 2020 at 1.5% rolling over into a new issue at 5.3% nearly quadruples the income stream on that slice of the portfolio. US fiscal deficits running near $2 trillion annually and a national debt approaching $40 trillion are fueling this trend. Quarterly investment income for major insurer peers has exceeded $4.5 billion, driven by exactly this dynamic.
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