Despite a difficult month for financial stocks and other interest rate-sensitive companies, insurance companies have managed to outperform the broader market. The SPDR S & P Insurance ETF (KIE) has managed to tick up more than 2% over the past month. This is in contrast to losses of around 6% for the SPDR Financial Sector Fund (XLF) , and a 10% pullback in the SPDR Bank ETF (KBE) . Around 80% of the names in the insurance exchange-traded fund are trading above their 50-day moving average, compared to only about a third for the financial ETF, and just 3% of the bank fund. The outperformance is notable. The KIE is beating the XLF by more than 9 percentage points over the past 20 days, its greatest relative outperformance in more than a decade. The moves come amid a significant pullback in Treasury yields — the 10-year note has gone to about 4.30% from 4.80% since late January — due to growing fears of a recession resulting at least in part from President Donald Trump’s tariff policies. Over the past month alone, the benchmark 10-year has declined almost a quarter percentage point. While that can hurt financial companies that are sensitive to economic slowdown concerns, insurance stocks are seen as a defensive play due to their ability to increase their premiums and lower the cost of claims. Their big bond holdings are also worth more as market yields decline. “As risk-on sentiment fades, the pivot from growth to value follows,” Bank of America analyst Joshua Shanker wrote in a note on Friday regarding insurance stocks’ outperformance relative to the rest of the market. KIE XLF,KBE 3M mountain Insurance ETF vs Financial ETF and Bank ETF past six months. As rates pull back, “Underwriting profitability still remains key in a relatively modest interest rate world, particularly with a downward interest rate bias going forward,” added Citizens JMP Securities analyst Matthew Carletti. Insurance companies with less exposure to equities and investment income will be the winners in the sector over the near term, Carletti added. He highlighted names such as Arch Capital Group , Fidelis Insurance and Bowhead Specialty Holdings. — CNBC’s Nick Wells and Michael Bloom contributed to this report.
