Annuities Providers Eyed As Takeover Targets

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

HEARD ON THE STREET: Insurers Prowl for Takeovers Of Annuities Sellers

• Summary: Since the UK's Aviva PLC announced its intention to buy AmerUs Group (AMH) for $2.9 billion earlier this month, a number of midsize insurers have been pegged as possible takeover targets. Conseco Inc. (CNO), Phoenix Cos. (PNX), Principal Financial Group (PFG) and Protective Life Corp. (PL) are attractive to larger insurers right now because they sell annuity products to aging baby boomers. Annuities, which generally offer payments over time in exchange for upfront investments, have tax advantages that have made them more popular recently. Industry consolidation is likely, given the heightened competition and need to lower costs.
• Comment on related stocks/ETFs: The runup in AmerUs stock was further fueled by a short squeeze. As mentioned in the article, the stocks of AmerUs Group peers have not moved much since that acquisition.

Comments

[Tom Cochrane:]

Agreed that Phoenix is extraordinarily attractive at a $184 million market cap. TARP funds rejection could also be viewed as a signal of strength. An innovative company that, in many ways, is well positioned in the market you describe above.

Although around 20X as expensive as Phoenix, Principal is such as strong, well managed company. Agreed on the level of attraction here.

Conseco IMO deserves its price to sales.

Apr 21 07:12 PM