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Wild September May Follow Dull August

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NU Stock Analyst

This column reviews August results for the industry’s stocks.

Last month’s terrorist attacks on the World Trade Center will likely make for a rocky ride for many insurance stocks in September. I’ll have a full recap of the aftermath soon, following up on continuing news coverage in National Underwriter and on NationalUnderwriter.com.

August 2001 was the closest to being an identical twin with the month before that this column has ever written into the record book.

That previous month, July 2001, recorded 45 winners and 69 losers. August had 44 winners and 69 losers. There were a few issues that ended where they began, but they dont affect this comparison.

Industry stocks were down in a remarkable July-August stalemate. But they were by no means down and out, as was the case for the general market in August.

The Dow Jones Industrial Average was off 5.5% last month, while the Standard & Poor’s 500 stock index fell 6.5%, and the NASDAQ Composite was much worse for the wear by almost 11%.

For the record, the 116 stocks we priced in August were down 2.45% for the month, which was fractionally worse than the 1.78% loss registered in July.

The service companies–the smallest group–almost broke even. After that all sectors ended down–some more than others.

It was the better-than-average performance of the two largest groups that gave a positive tone to August. Life and health stocks, welcoming John Hancock Financial to coverage, were down only 1.26%.

Meanwhile, the property-casualty sector ended off 1.93%. However, 20 p-c stocks advanced.

The granddaddy of insurance deals–AIG taking over American General for $23 billion in stock–became history.

I have owned both AIG and American General for many years and have considered them core holdings for any extensive portfolio of insurance stocks. AIG plus AGC is a 2 plus 2 equals 5 combination!

As an insurance stock analyst I believe two of the really great managements in our industry have been joined.

I cant finish without mentioning that the first hurricane to deserve a name, Erin, turned out to be nothing serious–just a glancing blow, thank goodness!

I am out on a limb predicting a real live hurricane will come ashore on the U.S. mainland this season. But, lets face it. Ill be happy if Im wrong!

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, October 1, 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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