After Hartford Financial's shares rose by 95 cents on Tuesday, a Barclays Capital analyst upgraded his view of the life insurance sector from "Neutral" to "Positive." However, reports show that the sector as awhole is not responding as quickly, even after the news from Barclays.
Hartford Financial Numbers Increase Due to Forecast
On Tuesday, the shares of Hartford Financial Services Group rose by 3.6 percent to close at $27.12. This and other insurance companies acquired gains in early trading after Hartford Financial sharply boosted its fourth-quarter earnings expectations.
Unfortunately, Hartford Financial was the only company to actually close with gains. Shares for other companies like Principal Financial, Aflac and Prudential Financial fell 44 cents, 26 cents and 44 cents, respectively.
Barclays Analyst Sees Potential for Life Sector
Despite the drop in shares on Tuesday, Eric Berg, analyst for Barclays Capital, upgraded his stock ratings for Principal, Aflac and Prudential, along with upgrading his view of the life insurance sector to "Positive."
He cited his reason being a new study by Barclays Capital Life Insurance Research that found that life insurance faced smaller risks from exposure to commercial mortgage-back securities (bundles of commercial mortgages sold to investors) than expected.
After examining 300,000 commercial properties and comparing their current market values with the outstanding loan amounts of borrowers, the study showed that life insurers are in a good position to sidestep many losses.
Berg believes the reason shares may have dropped despite his good feelings about the sector is that others still carry concerns of losses. It may take some time for others to see that the sector is healing. When that happens, maybe shares will start to recover as well.
