NEW YORK -- The way a JPMorgan analyst sees it, life insurance companies have relatively little debt and prices for insurance are rising, but low interest rates will likely limit investors' returns.
Analyst Jimmy Bhullar said Thursday in a client note that the interest rate outlook is "considerably worse than it appears," which could reduce insurers' ability to make money from their investments. Sustained low rates pose the most risk to Lincoln National Corp., MetLife Inc., Symetra Financial Corp. and Protective Life Corp., according to the analyst.
Lincoln National shares rose 24 cents to $27.65; MetLife added 8 cents to $35.23; Symetra gained 7 cents to $13.27; and Protective Life rose 19 cents to $29.14 in afternoon trading.
He also on Thursday downgraded Aflac Inc. to "neutral" from "overweight," saying shares have already put in big gains and further increases may be tough, particularly with slowing sales growth in Japan. Aflac shares fell $1.66, or 3.1 percent, to $52.41. The stock has gained 23 percent in 2012.
Bhullar said Reinsurance Group of America Inc. and Prudential Financial Inc. were his top picks in the category.
Reinsurance Group shares gained 25 cents to $55.50, while Prudential dropped 50 cents to $55.52.
American International Group Inc., another major insurer, lost 29 cents to $36.19.