Life Insurance Sector Disparity

Amid the life-insurance group, analysts say some companies seem in better shape than others. Insurance giant MetLife, for instance, has solid cash flows from its extensive businesses that can help carry it through the turmoil, analysts say. The largest insurer in terms of assets, MetLife also has about 11,000 internal agents, making it less vulnerable to customer poaching by rivals. Some insurers, such as Hartford, sell much of their products through third-party agents who are more likely to switch allegiances in volatile times. Hartford declined to comment. MetLife also faces hurdles. It is saddled with $29.8 billion in unrealized losses that, due to accounting rules, it doesn't need to immediately recognize on its bottom line. If the economy continues to weaken, the company may need to realize more of those losses. MetLife declined to comment. Hartford also is losing room to maneuver. It is saddled with more than $8 billion commercial mortgage-backed securities, which have come under increased pressure as the economy has weakened. In October, Hartford received a $2.5 billion investment by German insurer Allianz SE. If the market makes another major move lower, the risks for life insurers will mount. "If the S&P 500 were to drop below 650 and stay there for a significant period, we would certainly have some very grave concerns about some of the major [variable annuity] writers," said Citigroup analyst Colin Devine, who is generally bullish on the sector and particularly MetLife.