A Few Winners Emerge In Quiet July

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NU Stock Analyst

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In the wake of a banner May and a good June, July was set up tobe a down month in insurance stocks, and that's exactly what itwas. Further, July 2001 was a quiet off month that scarcely left animprint on the industry's record book.

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Only 45 of the 115 stocks priced for this column made it to theplus column. There were 69 losers and one issue that was unchangedfor the month. That works out to a bearish win/lose ratio ofroughly 2/3.

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Over all, the 115 stocks we followed were down 1.78 percent,which was slightly worse than the Dow Jones Industrial Average andStandard & Poor's 500, but a lot better than the NASDAQComposite for the month of July. Six of the eight industry groupsended in the minus column.

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Only the brokers decisively bucked the trend and moved up withan 11.41 percent gain. Four of the five broker stocks sported plussigns for the month. Behind the double-digit advance was a 35.87percent surge in Clark/Barde Holdings, with a 15.15 percent assistfrom Brown & Brown. Marsh & McLennan essentially stayedeven for the month as it eased to 100.40 from 101.00.

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The specialists edged up a minimal 0.36 percent to qualify, justbarely, as the second “up” group.

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The largest sector, the 45 property-casualty insurers, almostended ahead for the month, but didnt quite make it. While 27 p-cstocks moved down in July, the group was still off only 0.76percent.

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However, the stocks of a number of companies where rateincreases were having a salutary effect responded with double-digitadvances.

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Erie Indemnity jumped to 36.00 from 29.75 to record a 21 percentgain. Baldwin & Lyons, the truck insurer, surged to 25.14 from21.00 for a 19.70 percent advance.

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California auto specialist Mercury General pleased Wall Streetanalysts by beating their estimates. Institutional buyers pushedMCY up 12.38 percent to 39.30. Mercury Chairman George Joseph gavea positive assessment of the companys prospects in the conferencecall that followed the release of second quarter results.

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For a change, I cant find any takeovers to talk about. But therewas an interesting major deal. Lincoln National announced it wasselling its wholly owned Lincoln Re to Swiss Re. Lincoln Nationalexecutives said they expect to receive net after-tax proceeds of$1.9 billion from the sale. Lincoln National said it plans to usethe proceeds from the sale for potential acquisitions and for sharerepurchases.

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News reports indicate that leading meteorologists forecast atotal of eight hurricanes this hurricane season. Should they turnout to be anywhere near correct, we are in for an active andworrisome time over the next six weeks.

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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, September 3, 2001.Copyright 2001 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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