Shares of major insurers rise, led by AIG

Shares of major insurers soared Monday, led by American International Group Inc., as the embattled company disclosed the names of its trading partners that indirectly benefited from federal aid it received.

The KBW Insurance index, which tracks 24 of the nation's largest insurers, rose 3.5 percent to $54.89 in afternoon trading.

The rise in insurance stocks came amid a broad market advance, fueled by reassuring comments from Federal Reserve Chairman Ben Bernanke that the recession could end later this year.

On Sunday, AIG made public the names of domestic and foreign banks that received money to cover losses on complex mortgage investments, as well as for collateral needed for other transactions. AIG, now about 80 percent owned by U.S. taxpayers, has received roughly $170 billion from the government, which feared its collapse could cause widespread damage to banks and consumers around the world.

The insurer's disclosure came amid public outrage over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.

President Barack Obama on Monday urged Treasury Secretary Timothy Geithner to pursue every legal avenue to block the bonuses. And New York Attorney General Andrew Cuomo told AIG he wanted a list of employees set to receive the bonuses by the end of the day.

AIG shares jumped 80 percent, adding 40 cents to trade at 90 cents.

Other big gainers included MetLife Inc., which rose $2.81, or 15.8 percent, to $20.55, and Prudential Financial Inc., which rallied $1.74, or 9.3 percent, to $20.50.

In a note to clients Monday, Morgan Stanley analyst Nigel Dally expressed his concern over the capital levels at Genworth Financial Inc., Hartford Financial Services Group Inc., Lincoln National Corp., Principal Financial Group Inc. and Torchmark Corp.

He subsequently cut his ratings on Lincoln National to "Underweight" and Hartford Financial Services to "Equal Weight." Dally said both companies could face sizable challenges if market conditions worsen. Specifically, Dally is concerned that Lincoln National could need to tap its credit lines if its liquidity deteriorates further.

Lincoln National slipped 18 cents to $8.85, while Hartford Financial jumped 27 cents, or 3.8 percent, to $7.31.

Genworth added 5 cents, or 3.3 percent, to $1.56; Principal Financial rose 31 cents, or 4 percent, to $8.08; and Torchmark gained $1.35, or 5.8 percent, to $24.56.

Meanwhile, Dally said Aflac Inc., Reinsurance Group of America Inc., Prudential and MetLife are well positioned to handle the economic downturn and are currently trading at attractive prices.

Aflac rose $1.37, or 9.4 percent, to $15.95. Reinsurance Group of America added $1.18, or 4.4 percent, to $28.24.

Insurers have seen their investment portfolios slammed by the ongoing volatility in the financial markets, which has resulted in hefty losses. Additionally, analysts have been concerned about some companies maintaining adequate capital levels, which is essential to avoiding costly downgrades from ratings agencies. Lower ratings can mean higher costs, and in some cases, even a loss of business.