UPDATE: Sterne Agee Downgrades StanCorp Financial Group to Underperform

Sterne Agee has published a research report on StanCorp Financial Group SFG downgrading the company from Neutral to Underperform. In the report, Sterne Agee writes, "SFG stock has appreciated about 40% off the lows in early August following extremely disappointing 2Q11 results. Part of the rebound was driven by upside to 3Q11 earnings which were well ahead of expectations on an improved Group Insurance benefit ratio. However, the vast majority of that QoQ improvement was driven by favorable mortality results in the group life product line as opposed to improvement in disability claims incidence or severity. We would be far more constructive on the stock if the improved underwriting results in 3Q were driven by something we felt was more sustainable. We believe a reversion to the mean on mortality in 4Q11 coupled with continued pressure on group disability results (it's simply too soon to see significant benefit from recent pricing actions) could lead to disappointing 4Q11 results and further downward estimate revisions." Sterne Agee has a $37 price target on StanCorp Financial, which is currently trading down $1.18 from Friday's $38.01 closing price.