News Column

A.M. Best Special Report: Merger and Acquisition Activity Pushes Life/Annuity Stocks Higher in Second Quarter of 2014

August 21, 2014



OLDWICK, N.J.--(BUSINESS WIRE)-- Following a 2.5% decline in the first quarter of 2014, life/annuity (L/A) stocks rose 4.3% in the second quarter versus a 4.7% rise in the S&P 500 stock index. 17 of the 24 stocks tracked for this analysis rose in the quarter, eight of which increased 5% or more. The best performers 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 L/A stocks can be attributed to the enthusiasm merger and acquisition (M&A) activity injected in the sector following the USD 5.7 billion proposed acquisition of Protective Life by Dai-ichi Life Insurance Co., Ltd. L/A 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 L/A industry, as it confirms Japanese insurers are looking at international opportunities to grow in the face of a shrinking domestic population. Large-scale M&A deals of this type typically pique investors’ interest in a sector.

To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=227935.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.



A.M. Best

Nick Halen, (908) 439-2200, ext. 5126

Industry Research Analyst

nick.halen@ambest.com

or

Christopher Sharkey, (908) 439-2200, ext. 5159

Manager, Public Relations

christopher.sharkey@ambest.com

or

Jim Peavy, (908) 439-2200, ext. 5644

Assistant Vice President, Public Relations

james.peavy@ambest.com

Source: A.M. Best


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