Life Insurers May need to increase the capital of credit los
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MarketWatch
10 March 2009 Tuesday 12:27 PM EST
SECTION: NEWS & COMMENTARY; Markets
LENGTH: 382 words
TITLE: Life Insurers May need to raise capital as credit losses mount
Signed: Alistair Barr, MarketWatch mailto: ABarr@marketwatch.com.
Alistair Barr is a reporter for MarketWatch in San Francisco.
SAN FRANCISCO (MarketWatch) - The life and health insurance, including MetLife Inc Conseco Inc May need to raise capital because they are more difficult to win out of the difficulty of mounting amid credit losses and the collapse of stock markets, analysts at Friedman, Billings, Ramsey said Tuesday.
FBR's Randy Binner and Kevin Barker downgraded MetLife (MET) and Conseco (CNO) to perform to outperform the market, saying the insurers in May are particularly vulnerable to such questions.
MetLife share jumped 15% to $ 14.83, supported by a large influx of financial services among the shares after several days of losses. Conseco fell 23% to 29 cents.
"The recent spread of enlargement and deteriorating economic impact analysis, which implies that most life insurers and health are at risk of needing to raise capital and their income prospects to emerge from the 'credit losses are decreasing, particularly for stock-market - sensitive names, "the analyst wrote in a note to investors.
A grim forecast of future losses incurred by life insurers and health, which includes losses that have yet to be achieved, suggests that there is a "significant" need capital to the industry, they said.
Credit losses will reach 3.4 times the surplus capital in the sector, on average - and that includes the additional capital that will be generated from all the gains this year and into 2010, analysts said.
For Conseco, credit losses may climb to 970% of excess capital and additional capital generated.
"It appears that the company will not be able to win his release," Binner and Barker warned. "The prospects are too uncertain for us to continue to recommend the name."
For MetLife, credit losses could top 300% of current and future excess capital, "said FBR.
Other companies in the sector face the same situation, analysts noted.
Hartford Financial Services (HIG) could suffer credit losses of up to 616% of the current and future capital, they said.
Credit losses at Principal Financial Group (PFG) May reach 432% of current and future surplus capital. The figure for Prudential Financial (PRU) might be 275%, analysts said.
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LOAD-DATE: 11 March 2009
Copyright © 2009 LexisNexis, a division of Reed Elsevier Inc.. All rights reserved
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MarketWatch
10 March 2009 Tuesday 12:27 PM EST
SECTION: NEWS & COMMENTARY; Markets
LENGTH: 382 words
TITLE: Life Insurers May need to raise capital as credit losses mount
Signed: Alistair Barr, MarketWatch mailto: ABarr@marketwatch.com.
Alistair Barr is a reporter for MarketWatch in San Francisco.
SAN FRANCISCO (MarketWatch) - The life and health insurance, including MetLife Inc Conseco Inc May need to raise capital because they are more difficult to win out of the difficulty of mounting amid credit losses and the collapse of stock markets, analysts at Friedman, Billings, Ramsey said Tuesday.
FBR's Randy Binner and Kevin Barker downgraded MetLife (MET) and Conseco (CNO) to perform to outperform the market, saying the insurers in May are particularly vulnerable to such questions.
MetLife share jumped 15% to $ 14.83, supported by a large influx of financial services among the shares after several days of losses. Conseco fell 23% to 29 cents.
"The recent spread of enlargement and deteriorating economic impact analysis, which implies that most life insurers and health are at risk of needing to raise capital and their income prospects to emerge from the 'credit losses are decreasing, particularly for stock-market - sensitive names, "the analyst wrote in a note to investors.
A grim forecast of future losses incurred by life insurers and health, which includes losses that have yet to be achieved, suggests that there is a "significant" need capital to the industry, they said.
Credit losses will reach 3.4 times the surplus capital in the sector, on average - and that includes the additional capital that will be generated from all the gains this year and into 2010, analysts said.
For Conseco, credit losses may climb to 970% of excess capital and additional capital generated.
"It appears that the company will not be able to win his release," Binner and Barker warned. "The prospects are too uncertain for us to continue to recommend the name."
For MetLife, credit losses could top 300% of current and future excess capital, "said FBR.
Other companies in the sector face the same situation, analysts noted.
Hartford Financial Services (HIG) could suffer credit losses of up to 616% of the current and future capital, they said.
Credit losses at Principal Financial Group (PFG) May reach 432% of current and future surplus capital. The figure for Prudential Financial (PRU) might be 275%, analysts said.
Marketwatch.com © 1997-2002, All rights reserved. See details in http://custom.marketwatch.com/custom/docs/useragreement.asp.
LOAD-DATE: 11 March 2009
Copyright © 2009 LexisNexis, a division of Reed Elsevier Inc.. All rights reserved
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