NU Online News Service, Jan. 3, 12:25 p.m. – Stock prices of life insurance companies will outperform the market in general during 2003, predicts Andrew Kligerman, a life sector analyst at Bear Stearns & Company Inc., New York.
Kligerman foresees life companies as a group trading at 10.7 times 2003 earnings per share and about 1.5 times book value. Those ratios, he notes, “are at the lower ends of their 10-year historical absolute and relative ranges.”
The analyst predicts strong fourth-quarter 2002 earnings releases, in part because the Standard & Poor’s 500 gain of 7.9% in the quarter would relieve profit squeezes on insurers resulting from guaranteed minimum death benefits and amortization expenses attributable to deferred acquisition costs.
“We estimate that every 1% change in the equity markets favorably impacts their EPS by more than 0.4%,” Kligerman says of life insurance companies.