Wall Street investors were already shunning life and annuity issuers in 2018, and that underlying current of negativity could help issuers muddle through the upcoming earnings season reasonably well.
Securities analysts at three firms — Keefe, Bruyette & Woods; Morgan Stanley; and Wells Fargo — talk about the possible effects of new stock market volatility, and pre-existing investor suspicion, in recent commentaries.
(Related: How 6 Annuity Issuers Are Doing Now)
Publicly traded companies are scheduling their earnings announcement dates for results for the fourth quarter of 2018, and all of 2018, now.
Ameriprise Financial Inc., the life and annuity issuer that has been the first to post its earnings in recent quarterly earnings release periods, says it will publish fourth-quarter earnings Jan. 30.
The earnings of publicly traded life insurers do not have a direct effect on the performance of the insurers’ life insurance policies and annuity contracts, but earnings may affect how much business insurers want to write, what kinds of business they want to write, and what they will do about prices for new and in-force products.
Ryan Krueger and Peter Xuan of Keefe, Bruyette predicted in a recent life insurance issuer preview that the stock market volatility will be “a headwind for equity sensitive life insurers.”
At most life insurers, variable investment income is likely to be modestly weaker than normal, the Keefe, Bruyette analysts write.
“That said,” the analysts write, “we’re not sure how much 4Q18 results will really matter, given the focus on 2019 and low expectations/valuations for life stocks.”
The analysts note that the title of their 2019 life insurance stock outlook commentary is, “The Opposite of Life Is Not Death, It’s Indifference.”
Nigel Dally and Bob Huang, analysts at Morgan Stanley, have given their outlook commentary for the fourth quarter “Winter Is Already Here.”
“Sharply lower equity markets are leading us to meaningfully cut estimates and price targets,” the analysts write.
But the analysts go on to say, “We see substantial upside potential across many stocks, given the sell-off.”