Q2 Insurance Sector Earnings: 5 Trends To Watch

I’ll give this one more quarter to see how well my readers like this, but here are the earnings in insurance so far this quarter.  As you can tell, I am doing it a little different this time, in providing a file, and less qualitative commentary.  It’s the same data that I provided last time, but now you can do your own slicing and dicing.

What affects insurance equity prices when earnings are released?  Three things: guidance changes (most powerful), earnings surprises (powerful), and revenue growth. (When the market can’t decide otherwise, they like to see top line growth.  I think that’s dumb, but give the market what it wants, then it will change what it wants on you…)

Trends so far:

• Exposure to UK property with the floods is a negative.
• Personal lines are doing badly, both bottom and top lines, aside from specialty areas.
• Commercial lines are still winning.  When do premiums finally get below technical pricing levels?
• I like Brown and Brown.  Wish I owned some.  Hope no one buys it tomorrow.
• Mortgage insurers are weak, but how much can they really get whacked when they are so near book value?

Full disclosure: long ALL

Comments

[FIG trader_:]

In your discussion of insurance holdings on July 8th, you sold ALL? did you buy it back, and if so why since you say trends in personal lines are doing badly? You also bought SAFT, AGII, PXT and several others, which were puppies at the top of the stairs which now find themselves at the bottom; what happened? Some consistency in reasoning and admission of qualitative errors seem to be in order; you think.

2007 Jul 24 01:19 PM