Merger and acquisition activity pushes life/annuity stocks higher in second quarter: A.M. Best
August 27, 2014 by IFAwebnews Staff
Following a 2.5% decline in the first quarter of 2014, life and annuity insurance carrier stocks rose 4.3% in the second quarter versus a 4.7% rise in the S&P 500 stock index, according to a special report from A.M. Best.
Seventeen of the 24 stocks tracked for this analysis rose in the quarter, eight of which increased 5% or more. The best performers, according to A.M. Best, were Protective Life Corp., Symetra Financial Corp. and Principal Financial Group, Inc., rising 31.8%, 14.7% and 9.8%, respectively. Kansas City Life Insurance Co. and StanCorp Financial Group, Inc. were the weakest stocks, falling 5.6% and 4.2%, respectively, according to an A.M. Best special report.
Much of the quarterly gains for life and annuity insurance carrier stocks can be attributed to the enthusiasm merger and acquisition (M&A) activity injected in the sector following the $5.7 billion proposed acquisition of Protective Life by Dai-ichi Life Insurance Co., Ltd., A.M. Best wrote in a special report.
Life and annuity insurance carrier stocks, which were roughly flat before the announcement on June 3, 2014, rose 4.1% in less than a month after the proposal was made public. In fact, 23 of the 24 companies A.M. Best is tracking saw their share prices rise through quarter-end after the announcement. An acquisition of this size and magnitude is significant for the global life and annuity insurance carrier industry, as it confirms Japanese insurers are looking at international opportunities to grow in the face of a shrinking domestic population, A.M. Best predicts. Large-scale M&A deals of this type typically pique investors’ interest in a sector, A.M. Best added in its report.
