Lincoln National Leads Insurer Rally on Buyback Prospects

Lincoln National Corp. led a rally among insurance companies as Sandler O’Neill & Partners LP analysts said the firm may increase share buybacks and boosted their price target.

Lincoln gained 3.2 percent to $35.74 at 10:34 a.m. in New York, the most on the Standard & Poor’s 500 Insurance Index. All 22 companies in the gauge advanced as equities rallied and bond yields rose after an increase in U.S. payrolls.

The insurer will probably repurchase $450 million of shares this year, after Chief Financial Officer Randy Freitag said the company bought back $150 million in the second quarter, according to Sandler O’Neill analysts led by Ed Shields. They raised their 12-month price target on the Radnor, Pennsylvania-based company to $39 from $37.

“We believe that LNC will repurchase more shares than the $400 million guidance” for 2013, the analysts wrote in a research note today, using Lincoln’s ticker symbol.

The S&P 500 Index gained 1 percent after Labor Department figures showed U.S. employers added 175,000 workers in May. The 10-year Treasury yield rose 6 basis points, or 0.06 percentage point, to 2.14 percent.

Life insurers invest payments from clients in bonds and other assets to generate profits and meet future obligations. Interest rates near record lows have pressured results at the companies. MetLife Inc. and Prudential Financial Inc., the largest U.S. life insurers, advanced at least 2 percent today.

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