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Higher interest rates and a steeper yield curve are the first items on all insurance company CEOs’ Christmas lists. It’s no surprise, then, that insurance stocks surged on May 22 when the yield curve on U.S. Treasury bonds began to steepen. Compound interest on fixed income holdings is a huge determinant of an insurance company’s ability to meet its long term obligations to policy holders, so investors in Canadian insurance stocks should pay close attention to U.S. inflation expectations in the months ahead. They should be a major driver of stock performance.