Insurers to take some of AIG's market share

JPMorgan analyst Jimmy S. Bhullar said AIG's losses will have minimal impact on U.S. life insurers and modest impact on pricing in the property and casualty market.

"For most insurers, the earnings per share lift from a pickup in (market) share would be less than losses on AIG-related investments," he wrote in a note to investors.

AIG, one of the world's largest insurers, teetered on the brink of bankruptcy early last week as it looked for fresh cash to help shore up its balance sheet, which faced a liquidity crunch amid the continued downturn in the credit markets.

Late Tuesday, AIG said it signed a definitive agreement with the Federal Reserve Bank of New York that provides the New York-based insurer with a two-year, $85 billion loan in return for a 79.9 percent stake in AIG and the ability to remove senior management.

AIG said it anticipates repaying the loan with the proceeds from asset sales. But Bhullar thinks that barring a significant improvement in credit trends, the proceeds aren't likely to entirely repay the loan.

Most large U.S. life insurers, notably MetLife Inc., Lincoln National Corp., Prudential Financial Inc. and Genworth Financial, have overlap with AIG's individual life and annuities businesses and should see a modest sales benefit, Bhullar said.

"Genworth should receive the greatest boost as it could gain share in both term life and fixed annuities," he wrote.

Trading in the sector was mixed Friday. Shares of MetLife lost $1.32, or 2.3 percent, to $55 in afternoon trading, while Lincoln National gained 23 cents to $48.43; Prudential Financial rose 14 cents to $74.21; and Genworth Financial shares fell $1.04, or 9.8 percent, to $9.54.

AIG has a more dominant presence in the personal and commercial insurance market, and Bhullar noted that ACE, Travelers Cos. and Chubb should be "key beneficiaries" of AIG's troubles.