) to in-line from outperform.
On Monday the company cut the third quarter and 2002 estimates. Analyst Colin Devine says the downgrade was accompanied by a $0.10 cut in both his 2002 and 2003 earnings per share estimates to $2.75 and $3.00, respectively.
Devine says his rating and estimate changes reflect a combination of items. He cites news that the company will incur a $0.09 per share of increased deferred acquisition cost amortization in the third quarter; increased earnings volatility going forward due to the company's s variable annuity deferred acquisition cost amortization policy; the likelihood of further losses on its investor portfolio; rising pension service costs; and the possible need to raise external capital. Devine has a $35 target.