Uncertainty about how regulators will apply systemic risk rules to insurers may be hurting life insurer stock prices, according to Thomas Gallagher.
Gallagher, a securities analyst in the New York office of Credit Suisse, makes that suggestion in a first-quarter earnings season preview comment.
U.S. life stock values have been soft, even though economic conditions look as if they should be reasonably positive for U.S. life insurers, Gallagher says.
One reason for sluggish stock prices could be the relatively weak stock price performance of the financial services companies that have already reported first-quarter earnings, and another reason could be the possibility that some life insurers might issue more stock, Gallagher says.
Gallagher says two other possible causes of soft prices could include possible changes in insurance accounting rules of all kinds and “uncertainty related to capital management in part due to potential systemically important financial institution (SIFI) rules.”
U.S. financial services regulators and regulators at international bodies such as the Financial Stability Board, Basel, Switzerland, have been focusing mainly on developing rules to prevent problems at banks that might be “too big to fail,” but the regulators also have been trying to develop similar rules for securities brokers, finance companies and other types of financial services companies, such as life insurers.
- Allison Bell