NU Online News Service, Sept. 19, 2003, 3:22 p.m. EDT – Buyers probably will scoop up blocks of life insurance and small life insurers in the next few months, but they probably will not acquire the best-known life insurers, according to Andrew Kligerman, an analyst with UBS Investment Research, New York.
“We expect further consolidation of the life insurance sector, due to the importance of scale, decelerating organic growth prospects, globalization and the opportunity cost of developing needed capabilities in-house, such as distribution,” Kligerman writes in a research note.
Despite the pressure for consolidation, low share prices will keep most likely acquirers from using their stock to close big deals, Kligerman predicts.
Kligerman is particularly skeptical about the idea that buyers will make deals in the near term for John Hancock Financial Services Inc., Boston; Jefferson-Pilot Corp., Greensboro, N.C.; Lincoln National Corp., Philadelphia; or The Phoenix Companies Inc., Hartford.
The strong euro has helped increase the value of the stock of possible European acquirers, but the acquisitive European companies have seen their share price-to-earnings ratios fall between 40% and 60% since the end of 2000, Kligerman writes.
UBS points out in a disclaimer accompanying Kligerman’s note that it does business and seeks to do business with the companies covered in its research reports.