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Life, P&C stocks slide amid lower Q1 earnings YOY for big players


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Life, P&C stocks slide amid lower Q1 earnings YOY for big players

Stocksfor some of the largest P&C and life insurers shed value during a week in whichmany companies reported depressed earnings, moving against the share-price trendsof the broader indexes.

The SNLInsurance Index gained 4.14% to 743.85 for the week ended May 5, while the S&P500 rose 2.94% to 2,058.79.

A quarterlyearnings report was one of several news itemsthat emerged from Berkshire HathawayInc.'s annual shareholders meeting, which offered unprecedented accesswith live streaming.

ChairmanWarren Buffett and Vice Chairman Charles Munger addressed topics ranging from companynews inside the conglomerate to global developments before a worldwide audience.

The companyreported a year-over-yearprofit decline to $3.74 billion, owing in part to slumps in its insurance and railroadbusinesses.

For KeefeBruyette & Woods analyst Meyer Shields, the event also offered an insight intothe complexities of investing and analyzing the revered financial giant. Buffettand Munger seemed sharp, but the size and the spectacle of the meeting reinforcedhis concern about emotion impacting the company's valuation, Shields wrote in aMay 1 note.

"Notwithstandingthe vast financial wisdom imparted, we believe that Mr. Buffett side-stepped manyBerkshire-specific questions, which highlights the downside risk of investors notfully understanding Berkshire," he said.

Buffettand Munger are effective at communicating with investors who are not immersed infinancial markets and all their jargon, Shields said. However, Buffett was evasiveon certain topics on which he was questioned, such as sales of its and Swiss Re Ltd. stakes and why GEICO Corp. has not adopted telematics, the analyst wrote.Shields does not recommend Berkshire's stock over broader indexes, and held hisrating at "market perform."

For theweek, Berkshire Hathaway shares slipped 1.42% to $215,880 per share.

was among thelarger life insurers that blamed part of their year-over-year declines on setbacks in alternativeinvestments. Lincoln National pointed specifically at underperforming hedge fundpositions.

LincolnNational executives said during the company's May 5 quarterly earnings call thatirregularities also dragged down its results, which President and CEO Dennis Glasssaid were disappointing. First-quarter income available to stockholders fell to$201 million from $299 million year over year.

An unusualnumber of early duration claims weighed downed results by about $8 million, CFORandal Freitag said. The company had claims on 16 large policies underwritten inthe past two years, compared with a quarterly average of about three, Freitag said.

The causesof death varied widely, and the company reviewed its underwriting to look for trends,Glass said.

"Whenyou do all that analysis, it truly looks like a blip," he said.

The company'sshares finished down 5.94% for the week, closing at $40.87.

Alternativeinvestments also hurtPrudential Financial Inc.'sfirst-quarter earnings results,which included lower after-tax adjusted operating income compared with the year-agoquarter.

Similarly,MetLife Inc. a drop in first-quarteroperating earnings compared with the year-ago quarter. That number fell to $1.33billion for the 2016 period for MetLife. AmericanInternational Group Inc. bookedlower operating income for the first quarter compared with the year-ago quarter.The company is in the midst of a major restructuringto improve its results and value for shareholders, some of whom have the company to break up.

KBW'sShields wrote in a May 3 note that AIG could improve its performance in commercialP&C by exiting underperforming lines.

"Poorexecution of its current strategy could also reinforce calls for more dramatic managementand corporate changes," Shields said.

AIG'sshares edged down 1.81% for the week to $54.81. MetLife shares fell 5.08% to $42.81,and Prudential gave up 2.33% to close at $75.83.

Insurancecompanies who reported year-over-year earnings improvements included , whichdisclosed 4.8% organicgrowth for the quarter and net earnings attributable to controlling interests of$46.5 million, more than double the $21.9 million for the prior-year quarter. Thecompany's share price grew 2.26% during the week to $47.08.

reported operating income of $1.02 billion during the quarter,during which its combination with ACE Ltd. closed.The company's operating EPS of $2.26 came in 9 cents above the S&P Capital IQconsensus normalized EPS estimate for the period. Chubb's shares advanced by 3.90%for the week to $122.46.