MET MetLife Inc

By Sarah Krouse and Leslie Scism 

Shares in large U.S. money managers and insurers fell further Monday, adding to losses accumulated last week in the wake of the Brexit vote.

The U.K.'s decision to leave the European Union is the latest blow to shares in publicly traded U.S. asset managers, which have struggled because of low interest rates and continued fee pressure from passively managed funds. Insurers also have struggled in the current rate environment and a rush by investors into Treasurys.

One of the deepest declines Monday belonged to Atlanta money manager Invesco Ltd, share of which were down more than 9%. Affiliated Managers Group Inc., Waddell & Reed Financial Inc. and Legg Mason Inc. stock were down between 5.5% and 6%.

Shares in asset managers tracked by fund research firm Morningstar Inc. are down 1.43% year to date through Friday, against a 0.76% return for the S&P 500 during that period.

Invesco has been particularly hard hit by the Brexit vote because of its exposure to the U.K. It is among the firms in the S&P 500 with the heaviest revenue exposure from customers there, according to FactSet. Invesco warned shareholders earlier this year that a vote to leave the EU could lead to market losses that lower its assets under management and currency movements that may weigh down the firm's financial results.

Now, it is trying to reassure investors and clients. Invesco Chief Executive Martin Flanagan said in a statement Friday that the firm has "strong measures in place to ensure that any immediate market volatility created by the vote and any changes brought about by this transition are well managed."

He added that potential exposure to client withdrawals because of the Brexit vote was just over $2 billion of its more than $130 billion in U.K. and European assets under management. A spokeswoman declined to comment beyond the Friday statement.

Insurance stocks also fell further than the market on Monday. MetLife Inc. shares declined 7.4% while Prudential Financial Inc. stock fell 5.6% and American International Group Inc. shares were down 3.8%.

MetLife warned investors earlier this year that a vote to leave the U.K. would lead to a long period of negotiations over the trade relationship between the country and the EU. It said its "business model relies on certain rights to operate cross-border insurance operations which may be eliminated or modified" after such negotiations. The firm added that operating expenses could rise if the U.K. opted to leave the EU and that currency swings across Europe could increase and impact its business there.

While most U.S. life insurers lack large European operations, they do invest heavily in high-quality corporates and other bonds priced off Treasurys. So when investors pile into Treasurys and abandon riskier assets, driving prices up and yields down, insurers feel the pinch.

Write to Sarah Krouse at sarah.krouse@wsj.com and Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

June 27, 2016 17:08 ET (21:08 GMT)

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