Shares of Conseco Inc. ended the week lower despite analysts’ warming to the insurance sector.

Joan H. Zief, an analyst at Goldman Sachs Group, upgraded the Carmel, Ind., company Friday to “market outperform” from “market perform.” Earlier in the week Conseco, which has $58.5 billion of assets under management, had reported a 76% rise in first-quarter operating profits. It cited strength in its finance arm and lower interest rates, which reduced the cost of its floating rate bank debt. Analysts said they are encouraged by Conseco’s plan to release variable annuity products in July that are specifically designed for banks.

Conseco closed down 2.21% Friday.

For the insurance sector annuity sales had better-than-expected returns in a volatile first quarter.

Nancy C. Benacci, an analyst with McDonald Investments in Cleveland who covers Conseco, said she expects a solid rebound for the sector because of reports of stronger-than-anticipated first-quarter variable annuity sales from companies including American General Corp. in Houston, Lincoln National Corp. in Philadelphia, and Hartford, Conn.-based Financial Services Group Inc.

“The numbers aren’t as negative as people expected. Our sense is that assuming the markets have stabilized a bit, you could have an improvement in sales as we move through the year,” Ms. Benacci said. “There is a pent-up demand for annuity products and a lot of money sitting on the sidelines.”

At Lincoln National, which has $27 billion under management and whose best-selling variable annuity brand is the American Legacy family, annuity deposits rose 4% in the quarter, to $1.4 billion.

Travis Pascavis, an insurance analyst with Morningstar Inc. in Chicago, said he remains cautiously optimistic. Annuity sales are up, but there are still concerns about Conseco’s debt repayments and its Standard & Poor’s ratings.

Conseco’s chief executive officer Gary Wendt “has done some great work improving a lot of things, and we expect some good positive things down the road, but no future is certain,” Mr. Pascavis said. “There are still clouds to clear before the stock is attractive from my perspective.”

Overall, the market indices rallied Friday on news that gross domestic product grew in the first quarter at a stronger-than-expected 2% annual rate, according to an initial reading by the Commerce Department. During the sluggish fourth quarter, GDP rose just 1%.

The Dow Jones Industrial Average rose 1.10% on the news, and the Nasdaq composite rose 2.01%.

Sung Won Sohn, an executive vice president and chief economist at Wells Fargo & Co., said the GDP results are clearly good news for the economy and banks.

“I think it is safe to say there will be no recession,” he said. “The first quarter was surely the most dangerous point in this economic cycle, and the economy still grew.”

The American Banker index of 225 banks closed Friday up 2.90%.

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