Grim Economic News Hits Insurers Across The Board

Weak consumer sentiment, a fourth-quarter plunge in the U.S. gross domestic product and a vote by insurance regulators against relaxed capital rules for insurers all helped pull down virtually all categories of insurance stocks in trading Friday.

Hartford Financial Group (HIG) led big life insurers down, falling 15.6% in late-afternoon trading. Lincoln National Group (LNC) fell 10.2% recently. Prudential Financial (PRU) fell 10.4%, and MetLife Inc. (MET) fell 4.9%.

Among property/casualty insurers, Allstate Corp. (ALL) led the way down after posting disappointing earnings Wednesday. Allstate was off 8.2% recently. Commercial insurer Ace Ltd. (ACE) was off 3.1% recently, and CNA Financial (CNA) was off 4.7%.

Mortgage and bond insurers also took big hits. PMI Group (PMI) led that group down, trading off 14.5% recently. Old Republic International (ORI) was off 9.4%, Radian Group (RDN) off 10.4% and Ambac Financial Group (ABK) off 7.3%.

All the insurers are exposed to mortgages and the economy in general in various ways, including though investments they hold in mortgage-backed securities, through insurance policies they wrote covering mortgage payments, or through products such as auto, homeowners or life insurance policies. Some hard-hit consumers have begun to cut back on their insurance purchases in all those categories.

Also on Thursday, the National Association of Insurance Commissioners voted against a series of proposals to provide statutory capital relief to insurers.

After Allstate's earnings report Wednesday, both Moody's Investors Service and Standard and Poor's cut the insurance giant's credit ratings.

Investment bank JPMorgan cut Allstate's rating to underweight from neutral on Friday.

-By Lavonne Kuykendall, Dow Jones Newswires; [phone]; [e-mail]

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