Principal, Lincoln, Hartford Lead Life Insurers Lower on Credit Concerns

By Andrew Frye
Bloomberg News
January 14, 2009

Jan. 14 (Bloomberg) -- Principal Financial Group Inc. and Lincoln National Corp. led life insurers lower amid concerns that losses on fixed-income investments will deplete capital.

Principal dropped $2.47, or 13 percent, to $16.63 at 10:47 a.m. in New York Stock Exchange composite trading. Philadelphia- based Lincoln fell $2.52, or 13 percent, to $17.53, and Hartford Financial Services Group Inc. declined 11 percent.

Life insurers are facing an increase in defaults on corporate bonds and commercial mortgages as the U.S. recession deepens. The carriers cut jobs, asked regulators to ease reserve standards and applied for government aid in the fourth quarter to replenish their dwindling capital cushion.

"The key factor weighing heavily on sentiment toward the life insurers is the possibility of a wave of credit defaults undermining their capital adequacy," Nigel Dally, an analyst with Morgan Stanley, said today in a research note.

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