With long term Treasury yields pushing higher and the Treasury struggling to contain them, the old rulebook for growth stocks and rate sensitive sectors is under pressure. That kind of reset can punish some portfolios, but it can also open the door to opportunities where higher yields are part of the business model. This article walks through three U.S. life insurance and annuity stocks that are exposed to this rate story and explains what that might mean for you.

The three stocks in this article are just a starter sample, and the full screen surfaced 15 more U.S. life insurance and annuity companies with equally compelling rate driven narratives that are not covered here. To go deeper into this idea, identify your own shortlist and analyze each opportunity in detail, head straight to the US Life Insurance and Annuity Providers Benefiting from Higher Long-Term Yields screener.

Principal Financial Group (PFG)

Principal Financial Group is a US$24.0b retirement, asset management, and insurance company that fits this higher yield theme because a large slice of its earnings comes from the spread it earns on long term assets backing annuities and retirement guarantees. Revenue is mainly driven by Retirement and Income Solutions at about US$7.8b, with another US$5.0b from Benefits and Protection and US$2.9b from Principal Asset Management, giving it multiple ways to link investment returns to policyholder promises.

Investors looking at Principal Financial Group today are really weighing up a clear rate story against some moving parts in the business. Higher long term yields can support the spread income that underpins its retirement and annuity products, while recent results show firmer margins, steady dividend growth and ongoing share buybacks. On the other side, past earnings volatility, fee pressure in asset management and reliance on wholesale funding mean results still depend on market conditions and capital discipline. If you want a company where higher yields are not just a headwind but a core part of the business model, PFG is worth a closer look.

Principal Financial Group’s mix of spread income, dividends and buybacks can look like a tight story; yet the real question is how durable that engine is across cycles. Before you decide where it fits in your portfolio, scan the analysis report for Principal Financial Group

F&G Annuities & Life (FG)

F&G Annuities & Life is a focused U.S. provider of fixed indexed and registered index linked annuities, pension risk transfer deals and indexed universal life policies that ties directly into the higher long term yield theme because its earnings depend heavily on investment income from long duration bond portfolios. The business reports about US$6.1b of revenue from life insurance related activities, and with a market cap of roughly US$3.0b it sits in the mid cap bracket for U.S. insurers.

F&G Annuities & Life gives you a concentrated way to gain exposure to higher long term yields, since its fixed annuity and pension risk transfer business is tightly linked to what it can earn on long dated bonds and credit assets. Management has been repositioning the investment portfolio, building fee based income streams and using tools like buybacks, which together could support returns if spreads on new investments stay attractive. The flip side is that all funding comes from capital markets rather than customer deposits, so periods of rate spikes or credit stress can pressure funding costs and capital. For investors seeking a focused approach to annuity economics in a higher yield environment, this is a stock that may warrant closer inspection.

F&G Annuities & Life is closely tied to long-term yields, but much of the story remains in the details of its balance sheet and credit book. Run through the F&G Annuities & Life financial health report

MetLife (MET)

MetLife is one of the largest global life insurers and annuity providers in this screener, with a business model that leans heavily on earning a spread between long-term investment yields and what it promises to policyholders. It generates most of its revenue from U.S. Group Benefits at about US$27.1b and U.S. Retirement and Income Solutions at about US$21.5b, alongside sizeable contributions from Asia at US$12.4b and Latin America at US$9.1b, plus MetLife Investment Management at US$1.1b. The company has a market cap of roughly US$61.1b.

For investors watching long-term yields grind higher, MetLife offers a clear test case of how a big life insurer might turn that shift into stronger investment income and potentially richer economics on new annuity and pension deals. The company is leaning into fee based and international growth, while also returning capital through dividends and buybacks. However, it still carries high debt, relies on external funding and has had uneven profit margins. For readers interested in the trade off between higher spreads, credit risk and earnings quality, MetLife is a stock that may warrant closer examination.

MetLife’s spread income story, global reach and capital returns can look powerful, yet the real puzzle is how much risk sits behind those earnings. Weigh that trade off now with the 3 key rewards and 1 important warning sign

Seeking Alternatives Beyond Life Insurers?

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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.