LOS ANGELES (AP) — Problems with ING NV's U.S. variable annuity business are unique to the Dutch bank and insurance company and don't signal potential issues with the broader U.S. life insurance sector, a Sterne Agee analyst said Wednesday.
ING disclosed earlier in the day that it will take a charge of around $1.2 billion to $1.4 billion to close its U.S. variable annuity business. The move comes after the company concluded that assumptions about the business' likely future profitability have been wrong.
Specifically, ING discovered that customers are not allowing policies to lapse — and incur the resulting penalties — as the company hoped. ING stopped selling variable annuities in 2009.
In a client note, Sterne Agee analyst John Nadel said ING's revised assumptions about the U.S. variable annuity market essentially bring the company more in line those of U.S. insurers.
"In short, we view ING's charge as unique and not something to fear for U.S. (variable annuity) companies," Nadel wrote, adding: "We would not be sellers of (variable annuity) companies in sympathy with ING's announcement."
Wednesday afternoon, the Dow was down 3.37 points to 12,146 as of 3 p.m. Eastern, while the Nasdaq composite stock index slid 15.34 to 2,634.
Life insurers' stocks were mixed.
Unum Group rose 3 cents to $22.10; MetLife Inc. was down 31 cents to $32.58; Lincoln National Corp. slipped 41 cents to $20.38; AFLAC Inc. fell 46 cents to $44.34; Ameriprise Financial Inc. rose 37 cents to $47.30; Prudential Financial Inc. was down 38 cents to $51.03; Sun Life Financial Inc. gained 21 cents to $18.74; Torchmark Corp. slipped 53 cents to $43.21; Principal Financial Group Inc. fell 27 cents to $25.20; Assurant Inc. added 23 cents to $40.15; Hartford Financial Services Group Inc. was down 10 cents to $18.42; and, Reinsurance Group of America Inc. fell 2 cents to $51.48.