Rate Hikes Could Be Coming: History Likes These 4 Insurance Stocks

For much of 2026, Wall Street piled into the technology giants that drive the benchmark S&P 500 and left insurers in the background. The Federal Reserve raised rates at its September meeting, and Kalshi traders put the odds of another quarter-point hike on December 9 at 79%. That move would push the federal funds target’s ceiling higher above 4.00%. But the industry that has historically benefited the most from higher rates is already reinvesting its bond portfolios at better yields. The 10-year Treasury yield is the signal to watch: it touched 5.31% on October 5 and was still 4.91% on November 2.

The engine is float. Insurers collect premiums up front and pay claims months or years later, so they invest that cash in the meantime, mostly in high-grade bonds. When rates rise, maturing bonds and fresh premiums get reinvested at higher yields, and investment income compounds. We pointed to the same mechanism when bond yields spiked in 2023, and four names show it at work: Chubb (NYSE:CB | CB Price Prediction), Travelers Cos. (NYSE:TRV), Progressive Corp. (NYSE:PGR) and MetLife (NYSE:MET). On Chubb’s October 21 earnings call, Chairman and CEO Evan Greenberg said "our current and future operating income benefits from a rising interest rate environment."

Past Hiking Cycles Left a Fingerprint Investors Should Study

Dividend-adjusted monthly closes run from the month before each cycle’s first hike through the month of its last hike:

Progressive Corp. rose sharply in both cycles. MetLife slipped, and the March 2023 regional-bank scare hit it hard: its shares fell from a $71.73 close in February to $57.94 in March. The bigger gains came after the hikes ended, as higher-yielding bonds replaced older ones. Since the end of 2018, share prices have risen 382.2% for Progressive Corp., 288.3% for Travelers Cos., 223.7% for Chubb and 219% for MetLife.

Four Insurers Already Cashing In on Higher Yields

Chubb: A $175 Billion Portfolio Moving Into Higher Yields

Fixed income makes up 88% of Chubb’s invested assets, which total over $175 billion. Third-quarter adjusted net investment income reached a record $1.89 billion. The fixed-income portfolio yielded 5.2%, and new money was going to work at 6.2% as of September 30. Core operating EPS came in at $7.66, and the stock is up 21.43% year to date. The risk is the bond mark: rising rates produced $4.5 billion in third-quarter net realized and unrealized losses. Greenberg expects that hit to "amortize away reasonably quickly."

Travelers Cos.: Record Income With a Mapped-Out Runway

Travelers Cos. reported third-quarter core EPS of $9.18, beating the $7.36 estimate, as after-tax net investment income rose 7% to a record $908 million. Its fixed-income book yield rose to 4.02% from 3.86% at the end of 2025. New purchases earned roughly 120 basis points more than the portfolio’s existing yield. Management expects quarterly fixed-income investment income to grow from about $875 million to about $965 million over the course of 2027. The risk is weather: wind and hail caused $538 million in pre-tax catastrophe losses during the quarter.

Progressive Corp.: A Past Cycle Winner Facing a Price War

Progressive Corp. reported third-quarter EPS of $4.37 against a $4.33 estimate. Net premiums written rose 4% to $22.30 billion, and policies in force grew 6% to about 40.49 million. On its November 3 call, management said investment yields and rate filings "typically are bifurcated," so higher bond income generally doesn’t force the company to refile its insurance rates. The risk is pricing pressure: management said some rivals are giving up margin to grow, cutting rates, spending more on advertising and paying agents higher commissions.

MetLife: The Life Insurer Earning a Wider Spread

MetLife is the diversifier in the group, a life insurer that earns a spread on long-duration retirement liabilities. Second-quarter adjusted EPS of $2.43 beat the $2.29 estimate, and adjusted net investment income rose 7% to $5.55 billion on a 5.02% annualized yield. The CFO summed up the setup: "Over time, higher rates do provide positive momentum." History flags the risk. MetLife lost ground in both hiking cycles, and it recorded $670 million of net investment losses in the first quarter.

Valuations Leave Room Ahead of the December 9 Decision

All four trade at modest multiples. MetLife sells for 11 times forward earnings, Chubb for 13, and Travelers Cos. and Progressive Corp. for 14 each. MetLife’s trailing P/E of 19 sits well above its forward multiple, which tells you Wall Street expects strong earnings growth from it.

Heading into the December 9 meeting, I’m watching three things: whether the 79% hike odds hold, whether the 10-year yield stays near 4.91%, and whether new-money yields like Chubb’s 6.2% keep running ahead of portfolio yields. Because portfolios turn over slowly, each hike that sticks lifts earnings gradually, which is why the return has tended to lag the hike.

Bond marks will hit book values whenever yields spike. Over the long run, though, Wall Street has rewarded disciplined insurers through every kind of rate environment, and the gains since 2018 show float keeps compounding long after the Fed stops moving.

Contact [email protected] for any questions or corrections.