Citigroup Names Most-At-Risk Life Insurers

Life insurers' investment portfolios, overall, appear to be in good shape despite increasing concerns about credit quality in the U.S. housing market, Citigroup told clients this week, but stressed that certain companies' portfolios do warrant monitoring. "Although we do not expect investment quality will emerge as a material financial issue for life insurers, that does not mean investors should not keep an eye on outliers when it comes to their exposure to either high-risk assets or structured securities," analyst Colin Devine said. "As history has a way of repeating itself, we have found that those companies with investment quality issues in the past generally bear watching for signs of deterioration when credit markets once again weaken." Possessing the riskiest portfolio, Devine said, is Prudential Financial, which has the greatest exposure to high-risk assets at 13.8%. "While it is premature to speculate on the level of potential industry losses that may emerge, the one company that stands out with its exposure was Prudential," he said. Close behind Prudential, at 13.6% , is MetLife, while Ameriprise had the highest level of structured facilities at 33.7% followed by Protective Life at 30%. Genworth, with $3.8B of its $69.6B investment portfolio being mortgage-backed holdings collateralized by subprime/Alternative A loans, also requires monitoring, Devine said.

Commentary: Insurance Sector: 5 Trends To Watch • Three Portfolios: Bonds, Broad Market and Insurance
Stocks/ETFs to watch: PRU, MET, GNW, AMP, PL

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