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Five analysts and top management from six sector firms examine the Life Insurance sector in this 59-page Life Insurance Issue from The Wall Street Transcript, available at (212/952-7433) or www.twst.com

TWST: Michelle, what’s your perspective? Having seen these stocks perform well, what’s the outlook? And what are investors concerned about at this point?

Ms. Giordano-Valentine: We see an improved outlook for life insurance stocks, primarily driven by the theme that there have been three clouds essentially hanging over these stocks: earnings exposure to the equity market vis-à-vis variable annuity businesses; investment losses; and spread compression. Two of those three issues, in my view, are actually showing some signs of improvement. Variable annuity earnings are improving because of the positive movement in the equity market. VA sales and fees are improving and there is less pressure on earnings as a result of the acceleration of DAC expenses and we see less pressure on earnings related to guaranteed minimum death benefits. Also, on the investment loss issue, we see improvements in investment losses as a result of a slowdown in credit defaults, bankruptcies and fraud. We think that will lift some pressure that the companies have had on them from a capital perspective. However, an issue that’s actually getting worse is on-spread compression, primarily driven by a declining interest-rate environment. When we put all of these issues together, our view on the group is cautiously optimistic — which is much more positive than we were over the last two years, when we were quite negative. We would selectively buy stocks in the sector as opposed to buying stocks across the board.

TWST: Michelle, what are you advising investors to do at this point?

Ms. Giordano-Valentine: We’ve been telling investors that we’ve become cautiously optimistic on the group. Our favorite name in the sector is Hartford because I think it’s one of the better franchises in the life insurance industry that is benefiting from the improving equity market. It has limited exposure to spread compression and very limited exposure to any ongoing investment loss issues. I also like Prudential because it does have some exposure to the equity market, yet provides some other things. It’s a financial re-engineering story, in my view, where it is likely to generate an improving ROE over the next two years, primarily driven by expensing share buybacks, deploying capital more efficiently and a more intense focus on generating higher returns. We’ve also been encouraging investors to buy the other variable annuity companies, Lincoln National and Nationwide, because of this improving outlook we’re seeing for variable annuities. We think that the sentiment coming out of second quarter earnings is going to be more positive than negative on these names, relative to other names that might be more exposed to spread compression and yield issues. The stocks I recommend underweighting are names like Jefferson-Pilot and Protective Life because of the disproportionate exposure to spread compression, lower investment yields, reinvestment risks from mortgage-backed security prepayments and no cushion from improving earnings related to the equity market.

TWST: Do you have any closing comments?

Ms. Giordano-Valentine: Sure. Hartford is our favorite stock in the sector because I think it is one of the best franchises in the industry, particularly because of its scale on variable annuities, significant fund flows in variable annuities, very limited exposure to declining yields and very limited exposure to the fixed bucket of variable annuities and spread compression. So that remains our favorite name in the sector.

This special issue includes:

1) Life Insurance - In an in-depth (6,000 words) Roundtable Forum, Eric N. Berg, Senior Life Insurance Analyst at Lehman Brothers and Michelle A. Giordano-Valentine, the Senior Life Insurance Analyst in the Equity Research group of J.P. Morgan Securities, examine the outlook for the sector and share specific stock recommendations.

2) Life Insurance Companies - In an in-depth (4,500 words) Analyst Interview, Colin Devine, a Managing Director within Smith Barney's research division, examines the outlook for the sector and shares specific stock recommendations.

3) Outlook for Life Insurance - In an in-depth (4,400 words) Analyst Interview, Jeffrey R. Schuman, a Senior Vice President and the Senior Life Insurance Analyst at Keefe, Bruyette & Woods, examines the outlook for the sector and shares specific stock recommendations.

4) Insurance Brokers - In an in-depth (4,200 words) Analyst Interview, Jonathan B. Balkind, a Senior Vice President and head of insurance brokerage and bank research at Fox-Pitt, Kelton Inc., examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of six - sector firms examine the outlook for their firm and the sector. Firms include:

Citizens, Inc., Erie Indemnity Company, Frenkel & Company, Inc., Hartford Financial Services Group, MONY Group Inc., Summit Life Corporation