Tighter investment spreads at life insurance companies have driven UBS Investment Research to change its credit rating on the sector’s bonds from "market perform" to "underweight." The primary reason for this change is that life insurers’ bonds are trading right around their market value.

"During ‘normal’ times, we have generally seen fair value for life insurers being five to 10 basis points wider than similarly rated banks. At this point, benchmark insurance credits are trading at or through banks," according to UBS’s July 23 credit policy report.

Furthermore, the raft of earnings announcements from insurers will spur activity by analysts. The report says, "As we wade through the barrage of earnings announcements and outlooks we expect to reassess the individual recommendations of companies under our coverage."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.