FIG trader_

Insurance Stocks: Wall Street's Biggest Secret

I would agree that insurers like most financials have a license (state) to steal, but I would add some caveats. First, they have had some signifinicant rough patches in which they under-earned most financials by a wide margin, based on returns on capital and equity. The real issue is timing, since most people aren't waiting 30 years to find out. Don't mean to rain on the parade, but we are currently in one of those "high risk" periods, with the stocks discounting lower returns, but not the degradation mostly likely to come down the pike. Read HIG's CEO's comments to see what I mean, and look at the historical cyclicality in earnings for the industry. Its quite possible that in 3/4 years, they will be breakeven because of the severity of the downswing and under-pricing currently. Nobody ever wants to go to the video tape, but it happens every ten years or so. You mentioned some big winners (AFL, PGR AIG) obvious, but more money will be made on the short side of BER, PHLY, and ZNT in next 5 years (just retracing last 5 years up and probably going back to book ). It looks like the "top out" parade has begun in the whole financials group, though we could have one more burst to the upside.