The first quarter loss for insurance giant
spooked investors Friday and kept pressure on financial stocks.
The insurance giant plunged 8.8% to $40.28, after it reported a $7.8 billion first-quarter loss Thursday after the bell, its second straight loss in a row. Placing the blame on credit markets, AIG said it would raise $12.5 billion in capital in the next few months.
FBL Financial Group
was another big loser among insurers, crumbling 16.2% to $22.99 after it recorded a jump in losses blamed on six securities.
declined 2.8% to $23.63 when CEO Vikram Pandit said the bank would shed between $400 billion and $500 billion of its $2.2 trillion in assets. Pandit said he'll shed ``legacy assets,'' including real estate holdings and collateralized debt obligations, such as bonds backed pools of subprime mortgages. Analysts suggest he may unload life insurer Primerica as well.
Financial Sector Index tumbled 71.14 to 7,583.36.
shares jumped 7.8% after the Office of Thrift Supervision that reversed its requirement that the tax preparer hold a 3% capital reserve. The company's sale of its Option One Mortgage unit and its lower risk profile gave comfort to regulators. The stock gained $1.71 to $23.57.
One insurance company that had a positive quarter was
Allied World Assurance
, which came in with a higher first quarter profit of $130 million, vs. the previous year's $113 million profit. The Bermuda-based insurance and reinsurance company's shares shot up 7.8% to $43.87.
shares rose on a rumor that it would raise up to $2 billion in an attempt to offset losses on bad loans. A Keefe Bruyette analyst upgraded the stock to market perform, but cut his estimates. Shares of Sovereign rose 5.4% to $7.86.