News Column

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

September 5, 2014

By a News Reporter-Staff News Editor at Insurance Weekly News -- 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 A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit Copyright 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Keywords for this news article include: A.M. Best, Insurance Companies.

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Source: Insurance Weekly News

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