Barclays on U.S. Insurance/Life: 2Q11 Earnings Preview: Macro Headwinds Manageable, Valuations Are Attractive
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Rating Summary:
18 Buy, 6 Hold, 0 Sell
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Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
18 Buy, 6 Hold, 0 Sell
Rating Trend: Down
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Barclays on U.S. Insurance/Life: 2Q11 Earnings Preview: Macro Headwinds Manageable, Valuations Are Attractive
Barclays analyst says, "Life insurers' 2Q11 results will likely face headwinds from a slow economic recovery, as well as volatile equity markets and low interest rates, although we believe these challenges are manageable and are already reflected in the life insurers valuations at 7.6x 2012E earnings and 1.0x book value ex AOCI."
"Despite challenging macro conditions, we expect double digit y/y operating EPS growth on average for the life insurers in 2Q11 reflecting a steep yield curve,�accelerating share buyback activity, and accretion from recent acquisitions. Notably, our top picks within Life insurance, MetLife (NYSE: MET),AFLAC (NYSE: AFL) & Prudential (NYSE: PRU), have less sensitivity to falling interest rates than most life insurers while Lincoln (NYSE: LNC) likely has the most sensitivity to falling interest rates."
"Our outlook for the life insurance stocks is more favorable than for property-casualty insurers because life insurers should generate strong earnings and returns while P&C insurers will likely generate reduced EPS and declining ROEs. The life insurers also currently trade at a lower P/E than P&C insurers, which is unusual, and we anticipate this situation will reverse."
Barclays analyst says, "Life insurers' 2Q11 results will likely face headwinds from a slow economic recovery, as well as volatile equity markets and low interest rates, although we believe these challenges are manageable and are already reflected in the life insurers valuations at 7.6x 2012E earnings and 1.0x book value ex AOCI."
"Despite challenging macro conditions, we expect double digit y/y operating EPS growth on average for the life insurers in 2Q11 reflecting a steep yield curve,�accelerating share buyback activity, and accretion from recent acquisitions. Notably, our top picks within Life insurance, MetLife (NYSE: MET),AFLAC (NYSE: AFL) & Prudential (NYSE: PRU), have less sensitivity to falling interest rates than most life insurers while Lincoln (NYSE: LNC) likely has the most sensitivity to falling interest rates."
"Our outlook for the life insurance stocks is more favorable than for property-casualty insurers because life insurers should generate strong earnings and returns while P&C insurers will likely generate reduced EPS and declining ROEs. The life insurers also currently trade at a lower P/E than P&C insurers, which is unusual, and we anticipate this situation will reverse."
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