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Life Health > Life Insurance

The Market Sprang Back In October

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NU Stock Analyst

Whether the fiery crash of American Airlines Flight 587 was the work of terrorists or a tragic mechanical failure, the fact that this disaster hit on the heels of Sept. 11, and the nerve-wracking publicity generated will be harmful to the market performance of insurance stocks.

Only the brokers and a small number of other non-risk-taking companies appear well positioned to increase earnings in the period ahead.

October didnt live up to its reputation for market selloffs. There were no crashes, massacres, panics, wipeouts, or the like. Rather, October turned out to be a period of recovery for both the general market, and for this industry.

After three down months in a row, which featured a post-Sept. 11 general market meltdown, we almost made it back to even. For the record book, our list of stocks averaged a minimal decline of 0.5%. There were 60 advances and 57 declines. And for a change, not a single issue remained unchanged.

The brokers were best with an advance of 9.26%. Second best were the service companies with 7.12% escalation.

Our number three group was the financial services sector, which stabilized and then ended ahead 5.33% for the month. Six of the seven financial services stocks were gainers.

The reinsurers gained 4.34%, with six advances and six declines. Three double-digit winners gave a positive bias to the sector.

Property-casualty stocks, up 1.2%, made it five of eight sectors moving to the up side. There were 25 winners and 20 losers.

Life and health stocks, down 6.73%, took home the booby prize for the worst performance. The best thing that happened to life stocks was the addition of Principal Financial to our list. Shares of Principal were distributed in an IPO at 18.50. The stock ended the month at 22.50.

There were only a couple of other bright spots in the life-health sector. UICI (once United Insurance Companies Inc.) surged 11.15% to 15.15.

The multilines disappointed with a relapse of 6.37%. There were only two minimal advances.

The 2001 hurricane season turned out to be very wet and not very windy. Parts of the East Coast and Florida ended a period of drought conditions with a surfeit of moisture. Do you recall I predicted a major hurricane would do huge damage to the U.S. mainland? I was wrong. And it couldnt have been a better year to be 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, December 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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