Life insurance stock weakness after Mark Walter headlines overdone, Evercore says
XLF•Probe seen as mostly idiosyncratic
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Walter's Delaware Life Insurance and Clear Spring Life are under investigation by federal regulators on whether certain private credit investments categorized as unaffiliated investments were actually affiliated in nature.
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Brokerage views the events to be largely idiosyncratic to Delaware Life and its related companies rather than a wide-spread issue for the rest of the industry.
Sector-wide spillover seen as limited
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Some sponsor-backed insurers such as Delaware Life generally take higher asset risks versus traditional life insurers, and having some of those portfolios de-risked is probably a positive for the rest of the sector - Evercore.
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A deeper dive review into investment portfolios of publicly-traded lifecos and larger alternative-backed insurers doesn’t suggest similar practices, leading us to conclude the regulatory probe won’t widen much beyond what’s already been disclosed, Gallagher says.
Evercore says share weakness is an overreaction
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Share price weakness in traditional annuity players and some larger alternative asset manager-backed annuity players CRBG.N, EQH.N, BHF.O and LNC.N on Monday is an overreaction, Evercore analyst Thomas Gallagher says.
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Evercore says a WSJ story on Monday morning related to a federal probe into billionaire Mark Walter seemed to create a heightened level of investor concern for the life insurance sector and alt asset manager-backed insurers.
