Life insurers shares slip, analyst expects good 3Q

Life insurers shares slipped, but analyst expects good 3Q earnings

• On 1:53 pm EDT, Tuesday October 13, 2009

DES MOINES, Iowa (AP) -- Shares of insurance companies fell Tuesday an average of about 2 percent as the broader markets were mixed in afternoon trading.

Lincoln National Corp. was down about $1.20, or 4.4 percent, while others fell around 2 percent.

Credit Suisse Analyst Thomas Gallagher raised the price target on Lincoln National to $31 from $25 and increased his earnings estimates. He said the company is discounted because it has received federal money from the government's TARP program, but it otherwise has taken adequate action to shore up its capital. He maintained an "Outperform" rating.

Gallagher released a mostly positive report on the insurance sector saying he expects third-quarter earnings to be strong for most life insurers.

He upgraded StanCorp Financial Group Inc. to "Outperform" from "Neutral" and set a new target price of $49 from $38, saying the company is the cheapest in the sector versus 2010 net income and it has demonstrated the quality of its investment portfolio and solid operating earnings.

Shares declined 1 cent to $39.87.

He downgraded MetLife Inc. to "Neutral" from "Outperform" and reduced the price target to $39 from $41 saying he doesn't expect a material upside in the next year.

Shares fell $1.15, or 3 percent, to $36.94.

He similarly downgraded Ameriprise Financial Inc. for the same reasons. Shares fell $1.06, or 2.9 percent, to $35.85.

Gallagher said he's looking favorably on Aflac Inc. and Principal Financial Group Inc., both of which have ample capital and good operating earnings, although they face credit issues. He raised earnings estimates and price targets for both companies.

Aflac fell 57 cents to $45.14 and Principal Financial was down 88 cents to $27.63 in early afternoon trading.

Gallagher also increased price targets for Delphi Financial Group Inc., Hartford Financial Services Group Inc., Lincoln National Corp., Prudential Financial Inc. and Reinsurance Group of America Inc.

He said American International Group's decisions on whether to sell, retain various businesses or hold an initial public offering for its life insurance division ALICO would have important implications for the life insurance sector.

An IPO would place most pressure on the group, he said.

Buzz up!