DB Expects Stable Market for Life Insurers
Thursday, June 16, 2021 3:00 PM

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Deutsche Bank analysts believe that the life insurance industry have stronger capital positions today compared to the period during 2008 global financial crisis. They state that statutory capital, RBC ratios and excess capital are marginally higher for most insurers.

In the life insurance industry, first-quarter FY2011 strength was consistent with the Standard & Poor’s 500 index increasing by 5 percent following the 10 percent increase in fourth-quarter of 2010. DB analysts expect quarterly normalized operating earnings of $2 to $3 billion, assuming stable capital markets. They state that statutory capital increased by 1.5 percent to $81 billion in fiscal first-quarter of 2011, compared with a 4 percent decrease in Q4 of 2010. They state that the first-quarter 2011 increase was consistent with the operating earnings, net realized investment gains and losses. Prudential Bancorp Inc. (Nasdaq: PBIP) has the largest sequential increase at 5 percent. Torchmark Corp. (NYSE: TMK) has the largest decline at 18 percent. Analysts state that risks surrounding insurers include an equity market rally, credit spread narrowing, easing of insurance regulations, deterioration in the equity and credit markets, and rating agency downgrades. They state that several potential catalysts could occur in the near-term to reduce discount like sale of the mutual fund businesses and share repurchase announcement.

On a year-to-date basis, Prudential’s share performance is -1.49 percent, and as compared to S&P 500, its YTD share performance is -2.52 percent. TMK’s YTD share performance is 5.74 percent, and as compared to S&P 500, TMK’s YTD share performance is 4.63 percent.

Shares of Prudential were trading at $5.71, with zero percent change on its last close, and shares of Torchmark added 1.56 percent or 96 cents to trade at $62.46 in the closing session.

 

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