NU Stock Analyst

September was not the horrendous month for insurance stocks that July 2002 etched in red ink in our record book, but it came close. Lets consider some July-September comparisons before dissecting September.

We priced 114 stocks in both months. In July, a record-breaking 101 issues declined and only 13 advanced. For September, there were 95 losers and a slightly more palatable 19 winners.

In July, the portfolio of 114 stocks collapsed almost 9%. In September, the same stocks were off a less painful 6.52%.

Its no surprise that all groups were down in September. However, the reinsurers almost made it into plus territory, thanks to a 22.35% surge in Trenwick Group. The reinsurers ended down only 1.05%, while the other sectors came nowhere near recording a positive performance.

The best of the rest were the property & casualty stocks and the brokers, down 4.04% and 4.89%, respectively. Next came the service companies and the specialists, off 6.66% and 6.37%.

After that, the remaining sector losses get pretty grim. The life & health stocks were down 10.68%, the financial services group deteriorated 11.57%, and the multi-lines slumped 13.24%.

Saving the worst for last, lets ponder the September performances of the stocks of the even dozen major foreign insurance and financial services giants. We price and list their ADRs monthly. They were down an awesome 21.72% in September. Even more awesome, this same group of senior foreign stocks plunged 21% in July, before stabilizing in August.

I can only give you some opinions from European investors. They point to incredible damage in central Europe from the summer flooding. Something I was only vaguely aware of is that, unlike in the U.S., flood damage is covered by insurance in Europe. Think that one over!

Beyond that, foreign investors have reacted more negatively than U.S. investors to the possibility of war in the Middle East. As a result, gold and gold mining stocks have been winners. Other stocks, including our specialty, have been trashed.

Well, at least the hurricane season now appears to be moving toward a quiet conclusion after having produced storms with less wind and more rainfall than would normally be the case. For that we are thankful!

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, October 21, 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.