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Trump wipes out $5 billion of muni gains at top U.S. insurers

The insurance industry has seen more than $5 billion of gains erased on state and local bonds after Donald Trumps victory in the presidential race, with AIG and Travelers among the hardest-hit companies.

By Lisa Du, Romy Varghese, Sonali Basak | Updated on February 28, 2017

(Bloomberg) – The disruption in the municipal bond market is punishing some of the most loyal buyers of the debt.

The insurance industry has seen more than $5 billion of gains erased on state and local bonds after Donald Trump’s victory in the presidential race, with American International Group Inc. and Travelers Cos. among the hardest-hit companies. While the yield on state and local debt is typically exempt from federal taxes, that advantage would be diminished if Trump follows through on plans to lower the levy on all corporate profits. Beyond that, investors are concerned that an overhaul of federal laws could end the favorable treatment on munis.

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