Long term Treasury yields have swung from multi year highs to a sudden pause as the U.S. government plans to more than double bond buybacks, and that ripple hits everything from mortgages to life insurers and annuity providers. Capital is being pulled in many directions and investors risk sitting on the sidelines. This article walks through 3 stocks exposed to these rate moves and how they might be affected.

The three stocks below are just a starting sample, and the full screen surfaced 11 more U.S. life insurers and annuity providers with equally compelling narratives that are not covered here. If you want to go straight to the full universe and identify your own highest conviction ideas, head into the U.S. Life Insurers and Annuity Providers screener.

Daiichi Life Group (TSE:8750)

Daiichi Life Group is a large Japanese life insurer that sells protection and savings products at home and abroad, including the U.S., and runs a long duration investment portfolio that fits closely with the screener’s focus on life insurers and annuity providers. Its size is substantial, with a market cap of about ¥6.4t, which helps it participate meaningfully in global bond markets where shifts in long term U.S. Treasury yields can influence portfolio returns.

Investors looking at Daiichi Life Group are really looking at a global insurer that is reshaping its balance sheet to make better use of long dated assets while still paying a roughly 4% dividend yield. Management has been selling large blocks of domestic equities and recycling the proceeds into bonds to improve investment spreads, and higher U.S. long end yields could help that effort. The trade off is that funding is more reliant on external sources and earnings have seen one off swings, so the headline numbers do not tell the whole story.

Long duration assets at Daiichi Life Group can look attractive when U.S. yields shift, but the real story sits on its balance sheet. Read the Daiichi Life Group financial health report to see what that portfolio reshuffle might really mean for risk and resilience.

Build your own long duration income shortlist

Daiichi Life Group and the other two stocks in this article all came from the same type of screener, and you can set up your own filters just as easily. Use our flexible Screener to mix metrics like valuation, growth, balance sheet strength, risks and dividends, or tap straight into any of our curated Investing Ideas.

Brighthouse Financial (BHF)

Brighthouse Financial is a pure play on the U.S. life insurance and annuity theme, with most of its business tied to products that turn higher long term rates into investment income and spreads for policyholders. Annuities are the main revenue engine at about US$3.5b, followed by Run off at roughly US$1.4b, Life at about US$1.1b and Corporate & Other at around US$600 million, all generated in the United States. The company has a market cap of roughly US$3.1b.

For investors focused on rate sensitive insurers, Brighthouse Financial offers direct exposure to U.S. annuities and life products that can benefit when long term yields stay elevated, yet its stock still trades as if near term earnings volatility and merger related uncertainty are the whole story. The mix of strong annuity demand, margin improvement efforts and a potential take private transaction has to be weighed against funding that leans on external debt, complex legacy liabilities and earnings that can swing sharply with markets. If you want a case study of how this screener’s filters point to both opportunity and real balance sheet questions, Brighthouse is a company worth a closer look.

Brighthouse Financial appears to be a pure play on higher long term rates, but its stock story still feels incomplete. Get the full context with the 5 key rewards and 1 important major warning sign

T&D Holdings (TSE:8795)

T&D Holdings is a Japanese life focused insurer that fits the screener’s theme through its mix of long term savings, pension and protection products. These rely on reinvesting premiums at attractive rates to support policy promises. Alongside traditional life, medical and disability cover, it is involved in asset management, closed book and even pet insurance, giving it multiple ways to earn fee and underwriting income across the insurance cycle. The company has a market cap of about ¥2.3t, which places it among the larger players able to take meaningful positions in long duration assets tied to global rate moves.

Investors looking at T&D Holdings get a large Japanese life insurer with long duration liabilities that can benefit when reinvestment rates improve. At the same time, management is working to cut equity risk and recycle capital into higher yielding bonds. The story is not one way, though. The business is also dealing with higher mortality, wage costs and some chunky one off losses that make recent results harder to read, while funding leans on external borrowings rather than customer deposits. That mix of rate exposure, balance sheet reshaping and active buybacks means there is more to this insurer than the headline dividend and earnings line suggest.

T&D Holdings is reshaping its balance sheet around long duration assets while grappling with higher mortality and one off losses. Yet the real inflection point may sit in the analysis report for T&D Holdings

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.