Performance Review
This is a review of the nearly 1-year performance of the Insurance Watch List from February 21, 2016.
On the whole, the analyst estimates for insurance stocks were on target. Although AmTrust Financial Services (AFSI) did not come close to the estimated gain projected on February 2016, at least the price of the stock did not register a loss in the period of time covered.
On January 22, 2016, we posted an Insurance Watch List that highlighted 36 insurance companies. Of the 36 companies we highlighted two that we thought stood out, CNA Financial (CNA) and Endurance Holdings (ENH). Of the two companies we said the following:
“The fact that CNA Financial has fallen below the ascending conservative downside target of $36.13 indicates that the expected range to the downside is $28.57.”
On a closing basis, CNA declined to the $28.21 level before rebounding to the current price at $35.70. Assuming and investment into CNA at $28.57 or below, the gain in the stock price has been +25%. All things being equal, CNA has upside resistance at the ascending $36.13 level, or $43.65.
Regarding Endurance Holdings (ENH), we said the following:
“The fundamentals say the stock is a buy and the technicals indicate that waiting is necessary. If your goal is income at a reasonable price then accumulation of ENH is acceptable at current levels and lower.”
Endurance Holdings fell short of achieving our target of $55.69. However, as the stock was still considered worth acquiring based on the January 22, 2016 posting, it merited consideration as a reasonable holding as ENH is now at $91.95 with a pending $93 all cash acquisition price by SOMPO Holdings out of Japan.
While we managed to select two companies that have managed to achieve exceptional targets, it is worth noting that among all the companies on the January 2016 watch list, 13 companies (or 36% of the entire list) had equal or better performance than the minimum +25% achieved by CNA . Those companies are listed below:
| symbol | name | % chg |
| HTH | Hilltop Holdings Inc. | 56.18% |
| ENH | Endurance Specialty Holdings Ltd. | 52.97% |
| KFS | Kingsway Financial Services Inc. | 51.87% |
| STC | Stewart Information Services | 40.17% |
| RGA | Reinsurance Group of America Inc. | 37.50% |
| AJG | Arthur J Gallagher & Co. | 34.18% |
| RDN | Radian Group Inc. | 33.79% |
| AON | Aon plc | 28.33% |
| BRO | Brown & Brown Inc. | 28.20% |
| MTG | MGIC Investment Corp. | 27.78% |
| HMN | Horace Mann Educators Corp. | 27.44% |
| MMC | Marsh & McLennan Companies, Inc. | 26.75% |
| ANAT | American National Insurance Co. | 26.45% |
Because we always like to err on the side of caution, we have to assume that this is a high level of coincidence on our part, of which we hope to replicate if our analysis is generally accurate.
Posted in CNA, ENH, Insurance Watch List
