Yesterday was an ugly day for insurance stocks, falling more than the market as a whole, and for no good reason. No good reason? Well, I can think of two things: First, insurance gets tossed out with financials, even though aside from the financial insurers, they don’t typically share in the subprime mortgage or systemic risk concerns. Second, listen to the first seven or so minutes of the Brown and Brown (NYSE:BRO) earnings call. Pricing is falling apart almost everywhere in P&C insurance, with primary commercial weakening the most, and personal lines and reinsurance lagging.
Personal lines are doing badly, both bottom and top lines, aside from specialty areas. Commercial lines are still winning, even with premium rates weakening. When do premiums finally get below technical pricing levels? Mortgage and financial insurers are weak, but how much can they really get whacked when they are so near book value? (Perhaps down to 80% of book?) Life lines are doing adequately. Expectations have caught up with reality with the Bermudans. Property looks weak; maybe Tony Taylor can seek advice from Michael Price on how to shrink a company profitably and conservatively… (just kidding), but good job, Platinum Underwriters Holdings (NYSE:PTP).)