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IAK vs. ETF Alternatives
The iShares Dow Jones U.S. Insurance Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Insurance Index.
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Monday, Jan 272:54 PM
Monday, Jan 272:54 PM| 6 Comments
- “It is now obvious to us that the continuing objective of the Obama administration and the U.S. Attorney General is to punish banks and finance," writes Daivd Kotok's Cumberland Advisors, explaining a decision to underweight the banks.
- The firm previously had been overweight the regionals via the KRE and just two weeks added exposure to the larger lenders through the KBWB, but has quickly decided to reverse that move. "We were wrong" in thinking the "persecution" of the banks was near over, says Cumberland.
- "The investment strategy we pursued for our clients in this case was not to confront the U.S. Attorney General with an overweight position in a sector that he views as adversarial.”
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, PSP, IYF, EUFN, IAI, KIE, IPF, IAT, SEF, IYG, IAK, PFI, FXO, IXG, KBWB, PEX, KME, RKH, QABA, FINU, KCE, KRU, RWW, KBWR, FNCL, RYF, KBWI, PSCF, FEFN, AXFN, KBWP, KRS, FINZ, EMFN, KBWC, KBWX
Sunday, Dec 82013, 5:15 AM
Sunday, Dec 82013, 5:15 AM| 5 Comments
- Airlines have canceled over 1,000 flights, while freight companies and online retailers have delayed deliveries, due to severe winter weather across the U.S., particularly in the south.
- American Airlines (AAMRQ, LCC) has been especially affected after more than 400 flights from Dallas/Fort Worth, American's largest hub, were scrapped.
- FedEx (FDX) and UPS (UPS) have also felt the impact of the weather, while eBay (EBAY) has warned of shipment delays.
- Meanwhile, ice storms have cut power to over 200,000 homes from Texas to Tennessee.
- More freezing weather is predicted for tomorrow.
- It's likely to take a while for the economic cost of the storm to be calculated. Insurer Aon (AON) reckons that the losses from the tornadoes and thunderstorms that hit the U.S. last month will top $1B. Allstate (ALL) may take a large hit after towns in Illinois, where it is the second-biggest insurer, were among those to feel the full wrath of the storms.
- ETFs: KIE, IAK, KBWP, KBWI
Monday, Nov 182013, 3:18 AM
Monday, Nov 182013, 3:18 AM| Comment!
- Thunderstorms and tornadoes battered the Midwest over the weekend, killing at least six people, decimating the town of Washington in Illinois, and leaving tens of thousands without power.
- If they haven't already, the insurance assessors are likely to start counting the cost of the destruction.
- Insurance ETFs: KIE, IAK, KBWI, KBWP
Friday, Nov 152013, 12:32 PM
Friday, Nov 152013, 12:32 PM| Comment!
- Deutsche's Yaron Kinar may have downgraded Prudential (PRU -0.9%) this morning, but he's not bearish on the life insurance sector. The Pru move was about valuation and the company's relative lack of interest rate sensitivity.
- Those who stand to benefit more from higher rates had their price targets lifted: Buy-rated MetLife (MET +0.4%) is upped to $59 from $57 and Lincoln National to $56. Hold-rated Torchmark (TMK -0.5%), Unum (UNM -0.3%), and Principal Financial (PFG -0.1%) also had their targets raised.
- He notes current valuations imply about a 3% 10-year Treasury yield a year from now, but the taper could see the 10-year to 3.5% or higher, along with expectations from further increases.
- Related ETFs: KIE, IAK, KBWI, KBWP
Friday, Nov 82013, 10:41 AM
Friday, Nov 82013, 10:41 AM| 5 Comments
- Up sharply as interest rates fly higher (the 10-year is up 15 basis points to 2.75%) are the life insurers - all of whom have had their investment returns more than a little constrained by puny yields. IAK +2.4%
- MetLife (MET +5.9%), Prudential (PRU +4.5%), Lincoln National (LNC +6.8%), Hartford (HIG +3.1%).
- Also set to benefit from a steeper yield curve (if we're to believe their models) are the banks, and they're leading the S&P 500 higher. The TBTFs: Bank of America (BAC +3.3%), JPMorgan (JPM +3.1%), CItigroup (C +3.3%), Wells Fargo (WFC +2.6%). The regionals (KRE +3.4%): Huntington (HBAN +2.6%), Regions (RF +4.2%), PNC (PNC +2.8%), FIfth Third (FITB +3.4%), First Niagara (FNFG +2%), Keycorp (KEY +3.5%), Zions (ZION +4.1%), Comerica (CMA +3.1%).
- The XLF +1.9%.
- FInancial sector ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, KIE, SEF, IAT, IAI, IYG, IAK, FXO, PFI, KBWB, RKH, QABA, RWW, FINU, RYF, KRU, KBWR, PSCF, KBWP, KBWI, KRS, FINZ, FNCL
Wednesday, Oct 92013, 11:49 AM
Wednesday, Oct 92013, 11:49 AM| Comment!
- The property-casualty insurance cycle is "petering out," says the team, noting "outright softening" in reinsurance pricing, a leveling out in commercial-insurance price gains, decelerating personal line pricing, and flat auto-insurance prices (home-insurance prices remain on the rise).
- Still, Sandler's Q3 estimates remain above consensus, mostly because of the lack of catastrophe losses, and the firm has Buy ratings on ACE, AIG, ALL, TRV, and XL.
- American Financial (AFG -0.7%) is downgraded to Hold - a valuation call after a big run has the stock near Sandler's $58 price target.
- Price targets on ProAssurance (PRA -1.3%) and State Auto Financial (STFC -0.5%) are cut $2 to $47 and $1 to $20, respectively.
- Relevant ETFs: KIE, IAK, KBWP, KBWI.
Thursday, Sep 262013, 1:18 PM
Thursday, Sep 262013, 1:18 PM| 1 Comment
- 80% of insurers say their businesses will have to change to produce adequate returns over the next three years, is one of the conclusions of a BlackRock study: Global Insurance: Investment strategy at an inflection point?
- The low-yield environment has forced a majority of the industry to fine new fixed asset classes to invest in, and half to find new asset classes - like alternatives and derivatives - in which to put money. Along with those changes are greater risk management - 90% have increased investment in this area.
- Turning to operations, nearly two-thirds say regulatory changes are stopping them from moving into certain lines of business, particularly guaranteed products.
- Samples: "Pre-2008 crisis, mortgage-backed securities, corporate credit structures and credit default options were a large part of the supply, and that’s no longer there ... the supply of fixed income is minimal whereas the demand is greater than ever on the part of institutional investors."
- "The action of regulators, principally in Europe, has been to reduce the supply of capital available to provide ready markets to legitimate investors such as ourselves."
- ETFs: KIE, IAK, KBWP, KBWI.
- Individual names of interest: MET, PRU, HIG, XL, MMC, AXAHY.PK.
Thursday, Sep 192013, 10:51 AM
Thursday, Sep 192013, 10:51 AM| Comment!
- Life insurers continue to slide following yesterday's non-taper as investors face the prospect of interest rates maybe not rising as quickly as hoped.
- Mike Newton reminds: Sunlife (SLF -1.6%) disclosed in its recent quarterly report a 100 basis point move higher in rates would boost EPS BY $0.23 per share; for Manulife (MFC -2.6%) it's $0.16.
- MetLife (MET -2.4%), Prudential (PRU -1.4%), Hartford (HIG -1.7%), ING U.S. (VOYA -3.7%), Lincoln National (LNC -4.5%).
- ETFs of interest: KIE, IAK, KBWP, KBWI.
Thursday, Aug 12013, 3:08 PM
Thursday, Aug 12013, 3:08 PM| Comment!
- The insurance sector (KIE +2.1%) is flying higher with a number of new 52-week highs, led by MetLife (MET +6.2%) and Lincoln National (LNC +6.6%) which both posted big earnings numbers overnight.
- MetLife meant what it said about a shift away from capital and market-sensitive products with variable annuity sales off 40%. While management will not launch share buybacks while the SIFI designation process winds along (another 7-8 months), the team wouldn't rule out (CC transcript) another increase in the dividend (it raised it to $1.10 from $0.74 earlier this year).
- Under no such regulatory thumb, Lincoln has been busy buying back its shares at well below book value for some time. On the CC (transcript), management trimmed guidance for the negative impact of low interest rates from a $100M hit to earnings to a $35M hit (company made $351M in Q2).
- Other insurers on the move: Prudential (PRU +4.8%), Aflac (AFL +2.7%), Hartford (HIG +3.6%), ING US (VOYA +3%), Old Republic (ORI +2.5%).
- AIG (AIG +3.4%) nears a new 52-week high ahead of its earnings after the bell.
Thursday, Jul 182013, 11:59 AMThe insurance sector (KIE +0.9%), (IAK +0.7%) is boosted at Deutsche Bank thanks to higher interest rates. Lincoln National (LNC +3.1%) is upped to Buy with price target hiked to $45 from $36. Price targets are also raised for already Buy-rated MetLife (MET +1.6%) and Principal Financial (PFG +0.9%), and for Hold-rated Aflac (AFL +0.5%) and Unum (UNM +1.1%). Lincoln is particularly attractive for its interest sensitivity, lower international exposure and reliance on fixed-income AUM fees. |Thursday, Jul 182013, 11:59 AM| Comment!
Thursday, Jun 272013, 3:28 AMThe Financial Accounting Standards Board is due to propose changes to accounting rules for insurers that could cause increased earnings volatility and lower sales growth. Insurers would have to recognize premium revenue over time when insurance is being provided rather than when it is received, while the reporting of costs might be delayed as well. Every time a company released earnings, it may have to change its assumptions about its expected income and expenses. |Thursday, Jun 272013, 3:28 AM| 1 Comment
Friday, Jun 72013, 11:37 AMAmong the strongest performers in a strong market are insurers - particularly life insurers - on hope of a sustained rise in interest rates allowing better income on their investments (current holdings tend to be hedged meaning no losses). MetLife (MET +2%), Prudential (PRU +3%), Hartford (HIG +2.3%), Genworth (GNW +3.3%), Manulife (MFC +1.9%), Lincoln National (LNC +2.8%) Sun Life (SLF +1.4%), ING US (VOYA +2.8%). Insurer ETFs: KIE, though it is more exposed to P&C, IAK, KBWI, KBWP, though totally P&C focused. |Friday, Jun 72013, 11:37 AM| 1 Comment
Tuesday, Feb 262013, 3:57 PMPowerShares has shuttered 13 ETFs, representing less than 1% of the issuer's AUM, as of today's close. Affected funds follow (with competing funds in parentheses): PIC (KIE, IAK, KBWP, KBWI), PYH, PJB (IAT, KBE, KRE, RKH, QABA, KRU, KRS, KBWR), PSTL (SLX), PLK, PWND (FAN), PMA, PKOL (KOL), PKN (NLR, NUCL, URA), PTO, PAO, PCA and CVRT. (pdf) |Tuesday, Feb 262013, 3:57 PM| Comment!
Monday, Dec 172012, 5:20 AMInsurers reportedly warn global regulators that plans to designate some of them as "too big to fail" are incoherent, impractical and simplistic. Firms are particularly concerned about areas of their business deemed "non-insurance," "non-traditional," and "semi-traditional", which they may even be forced to sell. These include variable annuities and third-party asset management, both of which are important profit generators. |Monday, Dec 172012, 5:20 AM| Comment!
Monday, Dec 32012, 5:31 AMThe National Association of Insurance Commissioners has voted in favor of new regulations for how life insurers fix reserves for future claims in a decision that could free up billions of dollars for acquisitions, dividend increases and buybacks. However, critics, who include New York's Benjamin Lawsky, fear that insurers will become under-reserved and vulnerable to economic downturns. |Monday, Dec 32012, 5:31 AM| 8 Comments
Thursday, Nov 12012, 10:26 AM
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