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July Was One Of The Worst Months Ever

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NU Stock Analyst

A month ago a discouraged investor asked my opinion regarding the market in general, and insurance stocks in particular. My reply was, “Dont worry, nothing will be alright.”

Little did I know how correct my prediction would turn out to be!

July 2002 was one of the worst, if not the worst, months for insurance stocks, and for the general market, I can recall. A look at the price statistics for the month documents the falling market, and indicates our battered specialty did even worse.

Of the 114 issues priced, there were 101 declines and only 13 advances. Simple visual inspection indicates a win/lose ratio we have not seen before, and hope not to see again. All of the insurance groups, except the Property & Casualty stocks, were double-digit losers.

The Reinsurers were worst after collapsing 13.35%. Not much better were the Multi-lines, down 10.94%. The Brokers followed with a 10.82% decline. The Life & Health sector ended off 10.37%, which brings us to the P&C group.

The P&C stocks were off 6.90%! In most months that would have made P&C stocks one of the worst, if not the worst performing group. But that was not the case in July 2002 when 9 P&C issues actually advanced.

The buying in the stocks of the major P&C companies was institutional, and from both here and abroad. It was heartening to individual owners of insurance stocks to hear professional investors and money managers were the buyers of the stocks they held.

I recall the founder of this column, Levering Cartwright, paid special attention to stocks that went up in down markets. If Lev were still with us, he would be paying lots of attention to the P&C stocks that have been swimming against the tide of a brutal bear market!

Beyond the P&C group there were just a few stocks that would have grabbed Levs attention.

Among the multi-lines, there was Old Republic of Chicago, which broke even! (Off 0.06%.)

Twenty-six Life & Health stocks were down, but only one stock was up. That was ALFA Corp., which moved up 6.92%, from $11.70 to $12.51. Well!

We have sloshed through a couple of very wet, though not very windy, tropical storms out of the Gulf of Mexico. But the tropics have remained quiet–so far! More on this next month.

Mr. 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, August 12, 2002. Copyright 2002 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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