Below is the performance of the Insurance Watch List dated April 17, 2016:
||1-yr % chg
||OneBeacon Insurance Group, Ltd.
||AmTrust Financial Services, Inc.
||Universal Insurance Holdings Inc.
||Zurich Insurance Group AG
||AXIS Capital Holdings Limited
||Safety Insurance Group Inc.
||American International Group, Inc.
||FBL Financial Group Inc.
||American Financial Group Inc.
The best performing insurance stock was American Financial Group (AFG) with a gain of +38.31%. The worst performing stock was AmTrust Financial Services (AFSI) with a decline of –36.81%. The average change for the entire watch list was +14.14%. This is contrasted by the iShares US Insurance ETF (IAK) change of +17.59% in the same period of time.
Below we see that the analysts had their challenges. However, the estimates for AIG in the last year were right on target. This suggests that it would be worth watching closely what the analysts have to say about AIG going forward.
Insurance Watch List: 2017
The following are the insurance stocks to watch for the coming year:
Below is the performance of the stocks listed on our watch list dated May 2015:
||Greenlight Capital Re, Ltd.
||The Phoenix Companies Inc.
||Crawford & Company
||RenaissanceRe Holdings Ltd.
||Brown & Brown Inc.
Ace Limited gains are estimates based on the stock price change since the acquisition of Chubb Limited (CB). Ace Limited changed its name to Chubb and assumed the same stock symbol.
On our watch list summary dated May 1, 2015, we said the following:
“Is the U.S. insurance sector running out of gas? By the looks of the chart below, all indications are that the glorious run from the 2009 low may be over. The iShares US Insurance ETF (IAK) seems to be running out of steam just as it approaches the previous high set in 2007. A breakout to the upside is possible but not before taking a break to the downside.”
Since May 2015, the iShares US Insurance ETF (IAK) has traded in a range with some downside action and very little upside movement.
American insurers are making a nice recovery higher from the lows set in mid-February 2016. However, looming ahead is the double top indicated at points A and B on the chart. Failure to exceed these points could result in a decline below the February 2016 low. Alternatively, a breakout to the upside could be especially profitable for investors.
What is an investor to do under these circumstances? It is worth noting that last year we said there was considerable risk of decline in the insurance sector, however, we also bought a couple of American insurance stocks. both of those stock did exceptionally well relative to IAK, garnering gains of more that +20% each, relative to the IAK gain of +5%.
Is the U.S. insurance sector running out of gas? By the looks of the chart below, all indications are that the glorious run from the 2009 low may be over. The iShares US Insurance ETF (IAK) seems to be running out of steam just as it approaches the previous high set in 2007. A breakout to the upside is possible but not before taking a break to the downside.
The only consideration at this time is downside risk. The chart above outlines the Dow Theory downside targets with Edson Gould’s SRL extreme downside target of $16.81. Short-term, the downside target of $37.41 looms as a reasonable reaction from the recent peak before the sector potentially retests the prior high. The $30.91 level is considered the fair value for the IAK and should be assumed to be a required level for a retest if a full bear market ensues. As $11.38 was easily achieved from similar heights in the period from 2007 to 2009, so too should investors be willing to accept that $16.81 is possible.
“Many shall be restored that are now fallen and many shall fall that are in honor.”
Horace, Ars Poetica