Not All Insurance Stocks Were Turkeys

NU Stock Analyst

Thanksgiving for investors in insurance stocks was close to abalanced meal. It had satisfying events, but was marred chiefly byinsurance stocks that again underperformed the general market.

The November portfolio contained 119 stocks. In total they movedup under 4 percent, with 74 advances and 45 declines–close enoughto a win/lose ratio of 3/2. Five of the eight industry groupsadvanced and three ended down. However, not all were turkeys.

Among the nine multilines, there were three gains of over 20percent, with the group ending up 8.1 percent. The winner wasAlmerica Financial Corp. with a 29.14 percent gain to $10.99. Insecond place was the Hartford with a 20.24 percent fast forward to$49.06. In third place came CIGNA, which closed the month at$43.53, up 20.45 percent.

The specialist group registered a 6.14 percent gain to becomethird-best for November. Navigators Group was bid up 23.71 percentto $25.98.

Property-casualty issues advanced 5.12 percent, with a number ofconspicuous gainers. Vesta Insurance, an up-and-down stock inrecent times, ended on an up that registered 79.40 percent. Vestastarted at $1.99 and ended November at $5.57. FPIC, a medicalmalpractice marketer, surged and finished ahead 58.95 percent at$6.42.

21st Century Insurance Group, majority-controlled by AIG, jumped20.17 percent to $14. EMC Insurance Group started at $15.60 andended up 19.81 percent at $18.69. ACE Ltd., a stock with aninstitutional following, churned ahead 10.89 percent to $34.10.

Point of information: The Erie Indemnity Company is perhaps theleast known and followed of the largest p-c insurers. A groupheaded by Goldman Sachs is readying a 4.6 million-share secondaryoffering. The stock is coming from the estate of one Sam Black, along-time employee who passed on earlier this year at age 99.

The Erie is a quality company that can point to one of thehighest policy renewal rates in the industry. That policyholdersstay with the company is an overall recommendation in itself. (Apoint of disclosure: I do not own stock in the company.)

So let us sign off on the first 11 months of a very challengingyear and look forward to a better year to come. In the meanwhile,let us try to enjoy the most reliable event in our specialty. Thatis our “Guaranteed Year-end Rally.”

Only once in my long career following insurance stocks has therenot been a year-end rally! And that was, depending on memory, 1957,when stocks peaked around Thanksgiving and trended down into thenew year.

So its Happy Holidays to you and may you enjoy a bountiful newyear!

Thomas K. Meakin is affiliated with LIM SystemsInternational in Voorhees, N.J. Stock results are supplied by TheFiremark Group in Morristown, N.J.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, December 30, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.