Bear Stearns Research Finds Largest Life Insurers Most Likely to Offer Biggest Returns in '04.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 28, 2004

Aging Population and M&A Among the Trends Affecting Life Insurance

Industry

The new outlook on life? The bigger, the better. After a 40.6% run up in the Bear Stearns Life Insurance Index over the past year, 8.6% of that year-to-date, a new report by Bear, Stearns & Co. Inc. finds that market conditions now favor the largest life insurance companies. "Positive trends in the life insurance sector over the past year have lifted all boats, big and small, and the stock prices reflect that," said US life insurance analyst Saul Martinez who expects the sector to perform in line with the broader stock market for the rest of the year. "For the best returns in '04, investors should look to the biggest industry players."

Martinez, who recently initiated coverage of seven life insurance companies, expects the group's return on equity to grow from 11.1% last year to 11.6% and 12.6% this year and next year respectively. But according to a new report by Martinez, investors are likely to enjoy the greatest returns from investing in the largest life insurance companies with profitable international operations and diversified products. As baby boomers get older, life insurance companies that offer everything from mortality and morbidity products to estate planning and annuities should also be well equipped to compete for retirement dollars. To successfully bank on that trend, however, Martinez contends the industry needs an image make-over. "The industry has got to do a better job of telling the public that its products are well-suited for the retirement years."

Looking to offer a broader array of products and enhance distribution, larger life insurers may also snap up smaller rivals. "Consolidation should continue to play a big role in life," said Martinez. But with over 1,400 life and health insurance companies, Martinez does not expect M&A to drive stock prices higher. "This is a buyer's market so I wouldn't expect hefty premiums for sellers," said Martinez.

For a copy of the report by Saul Martinez, members of the press may call Monica Orbe at [phone] or email [e-mail].

Founded in 1923, Bear, Stearns & Co. Inc. is a leading investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $40.0 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers financing, securities lending, clearing and technology solutions to hedge funds, broker-dealers and investment advisors. Headquartered in New York City, the company has approximately 10,500 employees worldwide. For additional information about Bear Stearns, please visit the firm's website at http://www.bearstearns.com.