At Least August Wasnt July

NU Stock Analyst

In July, insurance stocks suffered the worst one-month collapse your columnist can recall. Then in August our depressed specialty tried to catch a rally in the general market but couldnt quite hold on. Investors were not encouraged.

The 114 stocks we priced ended off 4.19% for the month of August. There were 38 advances and 76 losers, which easily indicates twice as many losers as gainers. Perhaps the best that can be said for insurance stocks in August is that they were far better performers than in that disastrous July, when there were only 13 advances versus 101 declines!

As often happens in a dark month, there were bright spots. Two of the industry groups made it to the upside. The Financial Services sector was ahead a modest 3.15%, and the Brokers crept up 1.42%. It was a particularly impressive rebound for the Brokers, who had been hammered down 10.86% in Julys very painful selloff.

There were no big gainers in either group, just some single-digit advances and a scarcity of declining issues.

Among the broker stocks, Clark/Bardes Holdings led with a 5.46% gain.

The rest of the sectors, all of them below break even, suffered retreats between 2.85% for the service companies, to 6.70% for the Life & Health issues.

Taking the worst group first, it was debt-laden Conseco Inc., following in the footsteps of Baldwin-United and other noteworthy belly-ups, that dragged down the L&H stocks.

Back in June of 2000 Conseco brought in Gary Wendt, a G.E. Capital executive, to reduce the companys debt and get a turnaround going.

Sadly, time ran out on Wendt and Conseco. Policyholders should be survivors. But stockholders have already floated down the River Styx, belly up. The NYSE delisted Conseco stock on Aug. 12. I am removing CNC from coverage in the column.

For some background on the situation, I refer you to an excellent article on Conseco by Allison Bell, in the Aug. 19 Life & Health edition of National Underwriter. Nice job, Allison.

Beyond the Brokers and Financial Services stocks, there was a small diverse cadre of stocks that stood out by ending in the black.

UNUM Provident Corp. came to life with a double-digit gain worth 13.20%. Fremont General did better than that with a 24.41% advance. American Financial Group was up 12.96%, and title insurer First American sped ahead 12.70%.

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, September 30, 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.