Category Archives: Insurance Watch List

Insurance Watch List: October 2018

Posted on October 14, 2018 by | Leave a comment

Below are the Insurance Watch List stocks for October 2018. Continue reading →

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Insurance Watch List: June 2018

Posted on June 3, 2018 by | Leave a comment

Performance Review

Below is the performance of the June 25, 2017 Insurance Watch List.

symbol name 6/25/2017 6/1/2018 % change
GTS Triple-S Management Corporation 16.97 36.7 116.26%
UNAM Unico American Corporation 9.28 8.15 -12.18%
GLRE Greenlight Capital Re, Ltd. 20.55 14.7 -28.47%
FRFHF Fairfax Financial Holdings Limited 420.92 556.7 32.26%
MHLD Maiden Holdings, Ltd. 11.2 8.7 -22.32%
BWINA Baldwin & Lyons, Inc. 23.9 23.47 -1.80%
DGICA Donegal Group Inc. 15.93 13.99 -12.18%
ANAT American National Insurance Company 114.56 120.3 5.01%
FFG FBL Financial Group, Inc. 60.35 79.9 32.39%
CINF Cincinnati Financial Corporation 71.23 70.18 -1.47%
RLI RLI Corp. 55.04 66.13 20.15%
AMSF Amerisafe, Inc. 55.9 60 7.33%
NSEC The National Security Group, Inc. 14.04 15.85 12.89%
PKIN Pekin Life Insurance Company 12.65 12.7 0.40%
NAVG The Navigators Group, Inc. 54.8 59.5 8.58%
WTM White Mountains Insurance 862.44 904.4 4.87%
      average 10.11%
         
IAK iShares US Insurance ETF     3.37%

The performance of the entire watch list was better than the iShares U.S. Insurance ETF gain of +3.37%.  The ranked performance by the top five, top 1st, 2nd, & 3rd and 2nd, 3rd, & 4th is listed below for the various fundamental categories.

low p/e % change   low p/b % change   low yield % change
WTM 4.87%   GTS 116.26%   WTM 4.87%
FFG 32.39%   ANAT 5.01%   NAVG 8.58%
AMSF 7.33%   UNAM -12.18%   PKIN 0.40%
ANAT 5.01%   NSEC 12.89%   NSEC 12.89%
BWINA -1.80%   GLRE -28.47%   AMSF 7.33%
top 5 9.56%   top 5 18.70%   top 5 6.81%
top 1,2,3 14.86%   top 1,2,3 36.37%   top 1,2,3 4.61%
top 2,3,4 14.91%   top 2,3,4 1.91%   top 2,3,4 7.29%
high p/e % change   high p/b % change   high yield % change
MHLD -22.32%   RLI 20.15%   MHLD -22.32%
GTS 116.26%   AMSF 7.33%   BWINA -1.80%
GLRE -28.47%   PKIN 0.40%   DGICA -12.18%
RLI 20.15%   CINF -1.47%   ANAT 5.01%
NAVG 8.58%   NAVG 8.58%   FFG 32.39%
top 5 18.84%   top 5 7.00%   top 5 0.22%
top 1,2,3 21.83%   top 1,2,3 9.29%   top 1,2,3 -12.10%
top 2,3,4 35.98%   top 2,3,4 2.09%   top 2,3,4 -2.99%

The category with the most underperformance was the high yield group of insurance stocks with +0.22%, –12.10%, and –2.99% in the top 5, top 1,2,3 and top 2,3,4 groupings, respectively.  The category killer was the low p/e insurance stocks.  While the high p/e stocks had higher average gains, the low p/e stocks didn’t have a stock with triple digit gains (GTS) which skews the failings of double digit losing stocks (MHLD and GLRE) in the high p/e category.

Top Watch Review

In our June 25, 2017 posting, we highlighted a couple of stocks that appeared to be worth avoiding as a first purchase or worth selling the principal if a current holding. 

At the time we mentioned that MGIC Corp. (MTG) had just achieved a gain of +80% from the 2016 low.  In spite of this fact, MTG managed to runup another +47% by late January 2018.  Since that time, MTG has managed to land at a breakeven level with the June 25, 2017 posting.

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The next stock we covered for avoiding was Investors Title Co. (ITIC).  the stock has traded in a tight ranged over the last year and stands at a –4% decline in price from the June 2017 posting.

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Overall, the top watch recommendations were appropriate only in so far as there were compelling alternative investment opportunities.

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Insurance Review

Posted on June 2, 2018 by | Leave a comment

Below is the performance review of the insurance stocks from our December 28, 2017 posting to June 1, 2018.

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Insurance Watch List: December 2017

Posted on December 29, 2017 by | Leave a comment

Below is our year-end review of the insurance stocks with a market capitalization of $1 billion or more. 

Berkshire Hathaway has been given special consideration in a single post dated December 19, 2017 with our 2018 fair value, overvalued, and undervalued targets which have been achieved every year since 2012.

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Insurance Watch List: October 2017

Posted on October 28, 2017 by | Leave a comment

Performance Review

From our October 2016 Insurance Watch List,  we have the following performance of the entire watch list.

symbol name % chg
CNO CNO Financial Group, Inc. 56.67%
THG The Hanover Insurance Group, Inc. 24.84%
HALL Hallmark Financial Services Inc. 12.98%
ORI Old Republic International Corp. 6.44%

The average change for the list was +25.23% as compared to the iShares Dow Jones Insurance Index ETF (IAK) gain of +22.51%. Below is the performance of the same stocks relative to the analyst estimates:

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How’s this for a stunner?  Take a look at the performance Old Republic Title (ORI).  What in the world is that all about?  The analysts called for a +6.44% gain and that is exactly the amount the stock has increased one year later.  Let’s dare them to do it two years in a row.

The stock that we highlighted was Hallmark Financial Services (HALL). We pointed out the downside target however only one ($9.68) was achieved.  The underperformance of HALL was expected and therefore continues to put the stock in the position of being undervalued at the current price.

In our section titled “Sell the Principal” we highlighted the stocks that we thought investors should consider selling the principal.  Below is the performance of those stocks.

symbol name % chg
GNW Genworth Financial, Inc. -32.67%
STC Stewart Information Services -17.39%
KFS Kingsway Financial Services Inc. -2.65%
NATL National Interstate Corporation 0.25%
ENH Endurance Specialty Holdings Ltd. 1.19%
CRD-B Crawford & Company 1.97%
HTH Hilltop Holdings Inc. 9.72%
PFG Principal Financial Group Inc. 30.14%
SYCRF Syncora Holdings Ltd. 36.30%
UNM Unum Group 44.21%
LNC Lincoln National Corporation 58.14%

Four stocks exceeded the average return of the iShares Dow Jones Insurance Index ETF (IAK). The average change of the entire list increased by +11.74% as compared to the iShares Dow Jones Insurance Index ETF (IAK) gain of +22.51%.

October 2017 Insurance Watch List

Below is the latest list of stocks that we’re watching and the analyst estimates for the stocks:

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Insurance Watch List: October 2017

Posted on October 8, 2017 by | Leave a comment

Performance Review

The following is the performance of the Insurance Watch List stocks that we published in October 2016.

symbol name 2016 2017 % chg
THG The Hanover Insurance Group, Inc. 78.97 97.68 23.69%
HALL Hallmark Financial Services Inc. 10.25 11.59 13.07%
CNO CNO Financial Group, Inc. 15.67 24.04 53.41%
ORI Old Republic International Corp. 18.32 19.6 6.99%

The average return for the four stocks was +24.29% as compared to the iShares Dow Jones US Insurance Index ETF (IAK) gain of +20.27%.  The analysts called the performance of the stocks fairly well as indicated in the chart below.

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Of the four stocks, only Hallmark Financial Services (HALL) was not able to exceed expectations (assuming the low estimate and the price of the stock maintained the same p/e ratio).

In our “Sell the Principal” section we outlined the stocks that we thought investors should consider selling the principal as the price of the stocks had exceeded all reasonable one year gains.  Below is the performance of the list of stocks in the order as presented at the time.

name 10/16.2016 10/6/2017 % change
Syncora Holdings Ltd. 1.35 2.06 52.59%
Genworth Financial, Inc. 5.05 3.63 -28.12%
Crawford & Company 11.68 11.89 1.80%
Hilltop Holdings Inc. 23.15 26.08 12.66%
Lincoln National Corporation 48.9 75 53.37%
Endurance Specialty Holdings Ltd. 91.89 92.98 1.19%
Principal Financial Group Inc. 52.33 66.65 27.36%
Kingsway Financial Services Inc. 5.65 5.95 5.31%
National Interstate Corporation 32.42 32 -1.30%
Stewart Information Services Corporation 46.36 38.01 -18.01%
Unum Group 36.37 52.54 44.46%

 

The entire list gained an average of +13.76% as compared to the iShares Dow Jones US Insurance Index ETF (IAK) gain of +20.27%. Only four stocks exceeded the performance of IAK (UNM, LNC, PFG, and SYCRF).  Meanwhile, the remaining list of stocks performed well below the +20.27%.  More than half the list showed below average or negative returns.  This month’s “Sell the Principal” list has refined how the data is interpreted with the stated goal of highlighting those stocks expected to register negative returns after a review in October 2018.

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Insurance Watch List: September 2017

Posted on September 10, 2017 by | Leave a comment

Below is the insurance watch list for the month of September 2017.  In additions, we have included the analyst one year estimated returns and a review of watch list stock.

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Insurance Watch List: July 2017

Posted on July 28, 2017 by | Leave a comment

Below is the Insurance Watch List for July 2017:

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Insurance Watch List: June 2017

Posted on June 25, 2017 by | Leave a comment

Below is the performance of the May 2016:

symbol name May-16 Jun-17 % chg
SCRYY SCOR SE 3.29 4.06 23.40%
LFC China Life Insurance Co. Ltd. 10.81 15.5 43.39%
NWLI National Western Life Group, Inc. 205.51 320.56 55.98%
AXS AXIS Capital Holdings Limited 54.33 63.61 17.08%
RE Everest Re Group Ltd. 178.01 253.98 42.68%
IPCC Infinity Property and Casualty Corp. 76.55 94.15 22.99%
AAME Atlantic American Corp. 3.45 3.75 8.70%
MURGY Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft 18.86 19.88 5.41%
ESGR Enstar Group Limited 155.17 194.5 25.35%
BWINA Baldwin & Lyons Inc. 23 23.9 3.91%
       

The average change of the entire equal weighted list from May of 2016 was +24.89%.  This is contrasted with the +19.38% gain that was achieved by the iShares Dow Jones US Insurance Index.

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Insurance Watch List: April 2017

Posted on April 20, 2017 by | Leave a comment

Performance Review

Below is the performance of the Insurance Watch List dated April 17, 2016:

symbol name 1-yr % chg
OB OneBeacon Insurance Group, Ltd. 29.29%
AFSI AmTrust Financial Services, Inc. -36.81%
UVE Universal Insurance Holdings Inc. 36.12%
ZFSVF Zurich Insurance Group AG 21.72%
AXS AXIS Capital Holdings Limited 19.59%
SAFT Safety Insurance Group Inc. 26.33%
AIG American International Group, Inc. 7.77%
FFG FBL Financial Group Inc. 8.70%
AV Aviva plc -6.93%
AFG American Financial Group Inc. 38.31%

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.

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Insurance Watch List: 2017

The following are the insurance stocks to watch for the coming year:

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Insurance Watch List: February 2017

Posted on February 5, 2017 by | Leave a comment

Performance Review

This is a review of the nearly 1-year performance of the Insurance Watch List from February 21, 2016.

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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.

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Insurance Watch List: October 2016

Posted on October 16, 2016 by | Leave a comment

Performance Review

Below is the Insurance Watch List from October 2015 and the subsequent performance. The stocks are listed in the order that they were on the watch list.

symbol name 2015 2016 % chg
GLRE Greenlight Capital Re, Ltd. 21.96 20.34 -7.38%
WEDXF The Westaim Corporation 2.11 2.00 -5.21%
AWH Allied World Assurance 36.36 43.82 20.52%
RDN Radian Group Inc. 14.47 13.74 -5.04%
KFS Kingsway Financial Services Inc. 4.30 5.65 31.40%
AMIC American Independence Corp. 10.10 24.72 144.75%
DGICA Donegal Group Inc. 14.15 15.90 12.37%
OB OneBeacon Insurance Group, Ltd. 14.39 14.81 2.92%
L Loews Corporation 36.46 41.14 12.84%
RE Everest Re Group Ltd. 177.97 194.46 9.27%
BRK-A Berkshire Hathaway Inc. 204596.00 216370.00 5.75%
CNA CNA Financial Corporation 36.56 35.59 -2.65%
AON Aon plc 93.31 110.69 18.63%
BRO Brown & Brown Inc. 32.27 37.44 16.02%
AJG Arthur J Gallagher & Co. 43.73 50.24 14.89%
MMC Marsh & McLennan Companies, Inc. 55.74 65.99 18.39%

The entire watch list had an average gain of +17.97%, this is contrasted by the performance of the iShares U.S. Insurance ETF (IAK) gain of +1.74%.  A massive gain was achieved by small cap insurer American Independence (AMIC) with an increase of +144.75% after an August 31, 2016 cash offer from Independence Holding Company (IHC).  The worst performing stock was Greenlight Captial Re (GLRE) with a decline of –7.38%.

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Watch List Review

Posted on October 12, 2016 by | Leave a comment

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.”

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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.”

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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.

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Insurance Watch List: May 2016

Posted on May 26, 2016 by | Leave a comment

Performance Review

Below is the performance of the stocks listed on our watch list dated May 2015:

symbol Name 2015 2016 % chg
GLRE Greenlight Capital Re, Ltd. 30.24 20.40 -32.54%
PNX The Phoenix Companies Inc. 33.30 36.93 10.90%
CRD-B Crawford & Company 8.25 8.23 -0.24%
ACE ACE Limited 107.63 137.79 28.02%
RNR RenaissanceRe Holdings Ltd. 103.09 114.93 11.49%
BRO Brown & Brown Inc. 31.85 35.74 12.21%
      Average 4.97%

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.

Market Outlook

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.

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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%.

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Insurance Watch List: April 2016

Posted on April 17, 2016 by | Leave a comment

Below is the Watch List and Analyst Estimates for insurance stocks.

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