For Subscribers

Get the complete article now!

TWST: Tell us about the universe of stocks that you include in your coverage of the life insurance industry at Prudential.

Mr. Hall: I'm responsible for the life insurance sector, and I am also responsible for the asset management sector. The way that I've gone about building my universe of life insurance stocks is to focus on those companies that have the greatest amount of their business largely in what I'd call asset accumulation businesses, or companies that are also involved in some substantial way in the business of asset management directly. The companies that I have in my universe that fit those qualifications would be names like Lincoln National (NYSE:LNC), Nationwide Financial (NYSE:NFS), American General (NYSE:AGC), Liberty Financial (NYSE:L). So that's a representation of the types of companies on which I focus.

TWST: Are there any other companies or stocks that you want to highlight from your group?

Mr. Hall: Another name that I would mention would be ReliaStar (NYSE:RLR), which factors into the consolidation issue in the industry. It's a company that has a good set of businesses including a good and growing life insurance operation that's at the forefront of selling via an education platform. That set of characteristics has made it interesting as a candidate for combining with a bank. ReliaStar has made its thoughts clear that it is interested in exploring an affiliation with a bank. It's an important company to watch, because it will act as a bellwether as to whether we see any bank and insurer transactions materialize. If there has been a catalyst over the last year that has managed to override the depressing macroeconomic dynamics of rising interest rates in the group, it has been enthusiasm for consolidation. At different points in time over the last year, specifically in June of 1999 when there was building enthusiasm for HR10-type reform, and in the fall of 1999 when the legislation passed, you saw very strong price movements in these stocks. Anything that allows the market to see convergence as more of a reality can provide a powerful catalyst which could renew interest in life insurer shares.