Analysts On The Impact
Bear Stearns analyst Saul Martinez says it is too early to make informed decisions about the impact on life insurers. “Headline risk” could weigh on share prices and affect the growth and profitability of some insurers, according to Martinez, but in some cases, it also has led to sell-offs that are “overdone.”
“It is hard to justify a sell-off of these stocks at these values. But, there could be an overhang for a while,” he adds.
When asked about life and health insurers risk from lawsuits, Martinez replied that “theoretically, there is a legal risk if these allegations do prove correct.” But, he continues, his sense is that compared with commercial lines, in the group benefits business “there is a lot less room for manipulation and bid rigging.”
It is more difficult in the group benefits market to engage in alleged activity such as price rigging because of thinner price margins and disclosure requirements that include disclosing investment retirement assumptions and mortality assumptions, Martinez says.