NU Stock Analyst

In the wake of a banner May and a good June, July was set up to be a down month for insurance stocks. And that was exactly what it was. Further, it was a quiet off-month that scarcely left an imprint on our record book.

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

Over all, the 115 stocks we followed were down 1.78%, which was slightly worse than the DJIA and S&P 500, but a lot better than the NASDAQ Composite for the month.

Six of the eight industry groups ended in the minus column.

Only the brokers decisively bucked the trend and moved up with an 11.41% gain. Four of the five broker stocks sported plus signs for the month. Behind the double-digit advance was a 35.87% surge in Clark/Bardes Holdings, with a 15.15% assist from Brown & Brown. Marsh & McLennan essentially stayed even for the month as it eased to 100.40 from 101.

The specialists edged up a minimal 0.36% to qualify, just barely, as the second up group.

The largest sector, the 45 p&c companies, almost ended ahead for the month, but didnt quite make it. While 27 p&c stocks moved down in July, the group was still off only 0.76%.

The stocks of a number of companies, where rate increases were having a salutary effect, responded with double-digit advances.

Erie Indemnity, perhaps the least-followed major p&c insurer, jumped to 36 from 29.75 to record a 21% gain. Baldwin & Lyons, the truck insurer, surged to 25.14 from 21 for a 19.7% advance.

For a change, I cant find any takeovers to talk about. But there was an interesting major deal. Lincoln National announced it was selling its wholly owned Lincoln Re to Swiss Re. Lincoln National executives stated they expect to receive net after-tax proceeds of $1.9 billion from the sale.

Lincoln National said it plans to use the proceeds from the sale for potential acquisitions and for share repurchases.

My feeling is that Lincoln National, long considered to be an attractive takeover candidate, will become even more attractive!

I have just seen an article that said a panel of meteorologists forecast there would be a total of eight hurricanes this hurricane season. Should they turn out to be anywhere near correct, we are in for an active and worrisome time over the next six weeks! I still have the gut feeling the U.S. mainland will be clobbered by one or two storms that will cause record damage.

When they say evacuate. GET GOING!

Thomas K. Meakin is affiliated with LIM Systems International in Voorhees, N.J. Stock results are supplied by The Firemark Group in Morristown, N.J.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 3, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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