Ahead of the Bell: Insurers face risk from Lehman

A Friedman Billings Ramsey analyst said Monday that the bankruptcy of Lehman Brothers Holdings Inc. creates new risk for large life and health insurers, but added that the insurers have little direct exposure to Lehman's equity.

Lehman filed for bankruptcy over the weekend, part of a series of troubling financial developments that had investors bracing for a sharp decline in the markets Monday.

Friedman Billings Ramsey analyst Randy Binner said Principal Financial Group Inc. and Aflac Inc. may be weaker than their peers Monday because of their relatively high exposure to Lehman Brothers, but he said none of the insurers have a very large exposure.

Binner said Lehman's bankruptcy will hurt insurers including Hartford Financial Services Group, Prudential, MetLife and Principal Financial in particular. He described those firms as "larger, more market-focused and international."

"These firms are more likely to have relied on various derivatives for hedging purposes," he said. He added that it is not clear which companies are directly exposed to Lehman Brothers, but the companies are to inform investors of their exposure when that is possible.

In premarket trading, Lehman Brothers shares plunged to 31 cents, down more than 90 percent from Friday's closing price of $3.65. Its 52-week high of $67.73 was hit last November.

MetLife shares slipped $2.36, or 4.2 percent, to $54.15. The stock finished at $56.50 Friday.