Insurers Shares Drop On Interest Rate Worries
January 27, 2012 by N/A
Associated Press |
LOS ANGELES — Shares of insurance companies were mostly
trading lower on Thursday, a day after the Federal Reserve predicted low
interest rates through late 2014.
Low rates often make it difficult for insurers to pay consumers the higher
rates guaranteed in insurance contracts, such as annuities and universal life
policies, which the companies sold earlier.
On Wednesday, the Federal Reserve said it plans to keep interest rates
extremely low until late 2014 to encourage lending and investment and support
the economic recovery.
The Fed may also start buying up more bonds to drive long-term rates lower.
That could make mortgages and other loans more attractive to consumers, but
it’s not good news for insurers and other companies that invest heavily in
bonds.
Last month, Fitch Ratings forecast that insurers’ earnings and investments
would be under pressure this year due to low interest rates, increased hedging
costs and market volatility.
Among the insurers, Lincoln National Corp. led the sector decline, with shares
down $1.27, or 5.8 percent, to $20.67 in afternoon trading on Thursday.
Bucking the trend was Assurant Inc., which rose 23 cents to $39.70.
Elsewhere in the sector:
_ MetLife Inc. declined $1.62, or 4.5 percent, to $34.33.
_ Symetra Financial Corp. fell 23 cents, or 2.5 percent, to $9.05.
_ Genworth Financial Inc. slid 30 cents, 3.7 percent, to $7.76.
_ Torchmark Corp. was down 52 cents to $44.99.
_ Prudential Financial Inc. fell $2.70, or 4.7 percent, to $55.08.
_ Principal Financial Group Inc. slipped 24 cents to $27.05.
_ AFLAC Inc. declined 43 cents to $48.73.
_ Hartford Financial Services Group Inc. fell 61 cents, or 3.4 percent, to
$17.59.
_ Unum Group slid 31 cents to $22.82.
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