NU Online News Service, June 28, 3:52 p.m. – The investment market slump has forced Andrew Kligerman, an insurance analyst at Bear Stearns & Company Inc., New York, to reduce earnings-per-share estimates for key life insurers for the second time in less than two months.
Kligerman first cut his EPS estimates May 8. Now, he is responding to the continuing weakness in the S&P 500 stocks and the continuing deterioration in bond quality with a new round of cuts.
The analyst has put out a research note that trims his second-quarter EPS estimates to 51 cents per share, from 48 cents, for Prudential Financial Inc., Newark, N.J.; to 90 cents, from 91 cents, for Lincoln National Corp., Fort Wayne, Ind.; and to 80 cents, from 83 cents, for Nationwide Financial Services Inc., Columbus, Ohio.
But the size of the EPS cuts is relatively modest, and Kligerman’s index of life and annuity company share prices is down 5.9% for the second quarter, and 3.9% year-to-date.
Despite the EPS estimate changes, “we think the life group is relatively undervalued,” Kligerman writes.
Kligerman repeated earlier predictions that the publicly traded life insurers most likely to be affected by the stock-market doldrums will be certain financial-services giants that depend heavily on sales of variable annuities, variable life insurance and mutual funds.