BOSTON -- Shares of StanCorp Financial Group Inc. tumbled more than 10 percent on Tuesday after the disability insurer said its second-quarter earnings will fall well below Wall Street's expectations because of higher claims in its group long-term disability insurance business.
Shares of Unum Group, a larger rival in the disability insurance business, fell nearly 2 percent in afternoon trading, while shares of larger insurers were little changed.
StanCorp reported after markets closed on Monday that it expects to report earnings of 45 cents per share when it releases its second-quarter results on July 23.
Excluding net capital losses of 6 cents per share after taxes, StanCorp expects earnings of 51 cents per share. Before StanCorp pre-announced its earnings, analysts surveyed by FactSet had expected StanCorp to report earnings of 84 cents per share, excluding net capital losses.
StanCorp, based in Portland, Ore., said its second-quarter results were hurt by "comparatively less favorable claims experience in the group long term disability insurance business."
As a result, StanCorp expects the benefit ratio for group insurance products will be 88.5 percent for the second quarter. That's less favorable than management's annual guidance range of 80 percent to 82 percent for this year.
Sterne Agee analysts John Nadel and Alex Levine on Tuesday cut their earnings estimates for StanCorp and their price target for the stock. They cited a slower pace of improvement in profit margins for the group insurance business, and their expectations that weak earnings will result in the company curtailing share buybacks.
The analysts said they will maintain an "Underperform" rating on the stock "until we see clear signs of improved margins."
Shares of StanCorp fell $4.01, or 10.8 percent, to $33.08 in afternoon trading. The stock is down from a 52-week high of $41.99 reached in March. Shares fell as low as $24.96 in September.
Shares of Unum Group declined 37 cents, or 1.9 percent, to $18.82.
Among larger insurers, MetLife Inc. gained 21 cents to $30.60; Cigna Corp. added 4 cents to $43.27; and The Hartford Financial Services Group Inc. slipped 6 cents to $16.49.