Rates stay high

Chubb Limited is the largest listed p&c insurer — commercial and personal p&c in north america and overseas, a global reinsurance unit and an international life segment. it is a direct leg 3 name: a buy-and-hold investment-grade bond book of over $175b invested assets sits against largely fixed claim liabilities, and q3 2026 pre-tax net investment income was a record $1.79b against p&c underwriting income of $2.06b, so investment income is roughly 45% of pretax operating earnings and management ties the record to higher rates. portfolio yield of 5.2% versus a 6.2% new-money rate means maturities keep lifting book yield while short rates hold. underwriting, not spread, remains the larger earnings line, about a quarter of premiums are written overseas in non-usd currencies, and the life segment is small — material rather than pure expression of the float angle → 0.65.

construction analyst: a single-segment community bank scored on its own 8-k figures with web corroboration of the 4.04% nim, so the hold is a formality: nii $62.6m vs $21.4m fee income, 27% noninterest-bearing deposits, checking and savings funding 60% of assets, 1.73% cost of interest-bearing liabilities, 85% loan-to-deposit and only $150m of fhlb advances. fee income is roughly a quarter of revenue and time deposits are 24% of the base and reprice with market, which is a slightly larger dilution than the 0.90 names on this board (cfr, fhb) carry. 0.85 matches the researcher's own scale for ffin and iboc and clears every floor.

Interactive Brokers is an automated retail and institutional brokerage; net interest income was $1.15 billion of $1.91 billion net revenues in Q3 2026 (about 60%), the rest mostly commissions ($602 million). that puts idle-cash and margin-loan interest at the centre of earnings, which fits this portfolio's angle directly. two things keep it short of pure. first, IBKR pays clients benchmark minus 0.5% on usd balances above $10,000, so its cost of client cash reprices almost one for one with policy rates — the spread is a near-fixed slice plus margin-loan spread, not a zero-cost sweep. disclosed sensitivity is $83 million of annual nii per 25 bp of fed funds, roughly 2% of annualized nii, and the company itself attributes nii growth to balance and margin-loan growth partially offset by lower benchmark rates. second, about 30% of interest-sensitive balances are non-usd and over 80% of accounts are outside the us. material exposure → 0.6.

RenaissanceRe is a Bermuda property-catastrophe and casualty/specialty reinsurer with a US-dollar investment portfolio of $36.1b at end-2025 — roughly 2.6x its market cap. its three profit drivers in 2025 were underwriting income $1.3b, net investment income $1.7b and fee income $0.3b, so float yield was the single largest earnings line. the book is short (2.6-year duration, 4.8% yield to maturity) and held as trading fixed maturities, so maturing paper reprices to higher new-money yields within quarters; management guided 2026 retained net investment income above $1.25b and cited the higher-rate backdrop as a tailwind. this is a direct leg 3 expression. it stops short of pure because earnings volatility is dominated by catastrophe losses rather than rates, a share of investment income belongs to third-party capital vehicles (DaVinci, Vermeer), and rising yields first show up as mark-to-market losses on the fixed-maturity book, as in Q3 2026. material-to-core exposure → 0.7.

Travelers is a pure property-casualty insurer (SIC 6331) writing commercial and personal lines in the US, with a roughly $100 billion investment portfolio funded by premium float. in Q3 2026 net investment income was $1.098 billion pre-tax against core income before taxes of $2.403 billion, about 46% of pretax earnings (44% for the nine months), with management attributing the growth to higher yield and larger invested assets and guiding fixed-income nii to more than $3.6 billion after tax in 2027. the after-tax yield on long-term fixed income was only 3.2%, so the book is still repricing upward if short rates hold. the business is entirely leg 3, but underwriting gain ($1.432 billion in Q3) remains the larger and more volatile earnings line, so nii is a material rather than dominant driver → material exposure, slightly above the 0.6 house tier given the full-portfolio fit.

Westamerica Bancorporation is a single-bank holding company serving small businesses in northern and central California, about $6.0b in assets. earnings are almost entirely spread income: q3 2026 net interest income (fte) was $53.5m against $10.7m of noninterest income, so roughly 83% of revenue is the thesis line. the deposit base is the archetype the angle describes — about 45–46% noninterest-bearing checking, negligible time deposits, no brokered funding, and an annualized cost of funds of 0.26% that barely moved through the hiking cycle, i.e. a cumulative deposit beta near zero. the dilution is on the asset side: loans are only 13.7% of deposits, so earning assets are mostly fixed-rate bonds and cash that reprice slowly; nii fell year over year as cash yields dropped after the 2h 2025 cuts. a near-pure deposit franchise with a muted asset-repricing channel → 0.85.

W.R. Berkley is a commercial-lines specialty p&c insurer (excess and surplus, workers' comp, regional commercial, a smaller reinsurance segment) that collects premiums ahead of claims and holds a $34.0bn net invested asset base against $9.6bn of equity. that float is the thesis: q3 2026 net investment income was $383.5m against $574.3m of pre-tax income (about two-thirds), and $1.21bn against $1.77bn year to date. the fixed-maturity book is short (3.3-year duration, AA-) and management states reinvestment yields still exceed book yield, so a 4–5% short end keeps rolling into reported earnings. liabilities are claim reserves, fixed or inflation-linked, not rate-linked. underwriting remains the strategic core and a combined ratio in the low 90s is the other earnings leg, so not a 1.0, but investment income is the largest single swing factor — pure-leaning for the float-insurer angle.

American Financial Group is a specialty commercial P&C insurer (SIC 6331) with no remaining annuity or life segment — the reference record shows only Property and Casualty Insurance and Other. it is a classic float business: net earned premiums of $1,694m in Q2 2026 fund an investment portfolio about two thirds fixed maturities, duration roughly 3.4 years, 97% investment grade. P&C net investment income was $221m in Q2 2026 against pretax earnings of $316m and underwriting profit of $142m, so investment income is roughly 70% of pretax and about 1.5x underwriting — the largest swing factor in earnings, which is exactly the leg 3 angle of this portfolio. portfolio yield rose to 5.23% from 4.50% a year earlier. held below 1.0 because underwriting margin and a $2.8bn alternatives book (which drove the 23% NII jump) are material non-rate drivers, and fixed-income NII was flat year over year, meaning book yield has largely caught up with market rates.

Cullen/Frost is a Texas-only commercial bank (~$54b assets) funded almost entirely by granular relationship deposits. q3 2026: taxable-equivalent net interest income $490.8m against non-interest income $136.0m, so spread income is roughly 77% of revenue. average deposits $43.6b of which $14.4b (33%) non-interest-bearing; total deposit cost 1.16% and interest-bearing deposit cost 1.73% with the short end near 4%, implying a low cumulative beta. loans $23.4b against $43.6b deposits gives a ~54% loan-to-deposit ratio, with ~$5.8b parked at the Fed and a $21b securities book — no wholesale funding need. nim 3.78%, up 9 bp y/y, and management guides loan beta ~80% vs deposit beta 50–55% if rates rise, so the balance sheet is asset-sensitive. fee lines (trust, service charges, insurance) dilute the expression modestly, hence 0.9 rather than 1.0.

First Financial Bankshares is a single-segment Texas community bank (First Financial Bank, 81 locations) with a small wealth unit. q3 2026 net interest income was $138.5m against $35.6m of noninterest income, so spread income is roughly 80% of revenue. the balance sheet is almost entirely deposit-funded: $13.15b of deposits against $15.16b of assets, borrowings of only $21.9m, loan-to-deposit ratio about 65%, cet1 20.45%. deposit base is granular and cheap — 27% noninterest-bearing, interest-bearing deposits costing 2.07% versus a 5.30% earning-asset yield — and tax-equivalent nim has widened from 3.80% to 3.91% over four quarters as deposit costs fell and the $5.4b securities book reprices. this is the leg 1 mechanism almost in isolation; the deduction from pure reflects a noninterest-bearing share that is solid rather than top-tier and a large afs securities book carrying a $489.6m after-tax unrealized loss.

First Hawaiian is a $23.8b-asset Hawaii bank holding company funded almost entirely by granular island deposits. q3 2026 net interest income was $174.1m against $56.1m of noninterest income, so spread income is roughly 76% of revenue. deposits of $20.2b fund $14.5b of gross loans (loan-to-deposit about 72%), noninterest-bearing balances are 32% of deposits, total cost of deposits is 1.17% and falling, and average wholesale borrowings are essentially nil. management puts the cumulative total deposit beta near 30%, well under the brief's 60% disconfirmation line, and NIM expanded 5bp to 3.30% with q4 guidance higher. this is the leg 1 deposit-franchise mechanism in near-pure form; held just below 1.0 because a $404m accumulated other comprehensive loss sits against $2.8b of equity and trust and wealth fees are a real minority line.

construction analyst: the hold-back is a formality: the tier rests on the issuer's own q3 2026 earnings release (nii $290m vs $39.9m fee income, 30% noninterest-bearing deposits, 1.32% total funding cost, 86% loan-to-deposit, aoci about 7% of tangible equity) and an independent news item corroborates the deposit mix; nothing contradicts it. a 1.00 pure-play score is slightly generous on the researcher's own evidence: fee income is about 12% of revenue and $2.0b of repos at 2.69% is a rate-sensitive funding line, and the board scores pb at 0.95 and cfr/fhb at 0.90 on similar or cleaner mixes. 0.90 is the defensible number and clears every floor.

The Hartford is a US commercial-lines-led P&C insurer (business insurance, personal insurance) with a group benefits segment and a small fee-on-AUM mutual fund arm (Hartford Funds, core earnings about $58m a quarter — immaterial). it holds a $64.0bn invested portfolio, roughly 1.8x market cap, and earned $2.9bn of pretax net investment income in 2025 against $3.8bn of net income, so investment income is on the order of 60% of pretax earnings and the company itself attributes the growth to reinvesting at higher rates. that is the leg 3 float mechanism in its standard short-tail P&C form: material, not the whole business, because underwriting margin (combined ratios in the high 80s to low 90s) is the other primary earnings driver and a chunk of the 2025 lift came from limited partnership returns rather than book yield. earnings are almost entirely usd. material exposure with primary expression for this float-insurer angle → 0.65.

LPL Financial is the largest US independent broker-dealer and advisor platform; roughly $2.6 trillion of client assets, revenue mostly advisory and commission pass-through to advisors. the thesis-relevant line is client cash: about $57 billion swept to third-party banks (ICA and DCA programs) plus a small client cash account, earning a net yield of about 350 bps. in Q3 2026 client cash revenue was $461 million and net interest income $49 million against gross profit of $1,662 million — about 31% of gross profit, the largest single line but under a third. two dampeners: roughly 65% of the ICA book sits in fixed-rate contracts, so only the floating slice reprices with policy rates, and balances are only 2.2% of client assets with $50 billion already sorted into purchased money funds. material exposure to the broker-sweep leg, not the whole business → 0.55.

Prosperity Bancshares is a Texas and Oklahoma deposit-funded commercial bank (SIC 6022), $54.1b assets after the July 2026 Stellar merger. q3 2026 net interest income was $443.0m against $52.7m noninterest income, so spread income is roughly 89% of revenue. funding is the thesis archetype: noninterest-bearing deposits are 33.6% of $41.2b deposits, total cost of deposits 1.39% and interest-bearing deposit cost 2.09% with fed funds at 3.75–4.00%, implying cumulative deposit beta well under the 60% disconfirming threshold; loan-to-deposit ratio 77.8%, no brokered reliance, no wholesale dependence. earning assets include a large low-yield agency mbs held-to-maturity book ($852m gross unrealized loss at 12/31/2025) that reprices slowly, which delays rather than negates the mechanism and is the main reason the tier sits a notch under 1.0. nim 3.73% up 49bp y/y. fits the pure deposit franchise angle.

Charles Schwab is a retail brokerage and RIA custodian whose largest earnings line is spread income on idle client cash swept to Charles Schwab Bank. in 3Q26 net interest revenue was $3,476m of $7,171m total net revenue (about 48%), and bank deposit account fees — also a rate-driven spread on client cash held at a third-party bank — added $345m, so roughly 53% of revenue moves with short rates net of funding cost. transactional sweep cash stood at $492.8bn and net interest margin expanded to 3.04% as securities reprice while sweep deposits stay cheap, which is exactly this portfolio's angle. the remainder — asset management fees (~27%), trading (~16%) and other — is fee or activity driven, not spread, so the name is a core expression rather than a pure play: 0.75.

Stifel Financial is a wealth-management and investment-banking firm (SIC 6211) with FY2025 net revenues of $5.53B, roughly two-thirds from Global Wealth Management and one-third from the Institutional Group. the rates channel runs through Stifel Bancorp: brokerage client cash is swept into affiliated banks and lent or invested, producing Global Wealth Management net interest income of about $1.02B in FY2025 — roughly 18–20% of firm revenue and 29% of the wealth segment, against 48% asset-management fees. the deposit base is only about half low-cost: at Q1 2026 bank sweep deposits were about $11.5B versus about $14.3B in Smart Rate high-yield savings, which reprices with market rates, out of $30.8B total deposits. net interest income is a material swing factor in earnings but not the dominant line, and funding is partly high-beta, so the name sits at material-but-diluted exposure rather than a pure idle-cash franchise → 0.5.