I have read every NWLI report from 1970 forward. It appears as though nothing has changed in their approach and philosophy, other than time has passed. NWLI has never traded at this low a multiple to book value during that period. I am using the last few years in that statement, and I have owned since March 2011, and have averaged down quite a bit, whereas I am at an unrealized profit currently.
As far as I see it, all has stayed the same for the last 42 years. NWLI has always been focused on quality, fortress balance sheet, protection of policy holders, low to no dividend and minor to no stock buy backs.
The only thing that has materially changed is the price to book value. The price to book has typically been much higher. Personally, I think reversion to mean will take place.
1978 and 1979 was a difficult time for NWLI. They reported at cost (as they do now), and had large losses in GNMA and FHLMC. They finally exited those positions and took a large hit to equity. Today they have a low to mid duration high quality investment portfolio. They still report at cost, and the difference between now and 1978/79 is they are currently sitting on large unrealized gains in their amortized cost reported balance sheet.
I have no issues with NWLI. If you are a long term holder with issues of NWLI, one must ask themselves, what is different today than 10 years ago, 20 years ago, 30 years ago, etc. etc.
Sentiment: Strong Buy
I actually reach a somewhat different conclusion, i.e. the life insurance business has morphed from a primarily mortality risk business 40 years ago to an asset gathering to earn a spread business. The capital intensity of the business is a lot higher today, and the financial models significantly more tightly wound than 40 years ago. Total asset:equity leverage today is closer to 8:1 compared with around 6:1 in 1970, total interest income as a percentage of total revenue is 75% today vs. closer to 25% in 1970, and that's despite interest rate significantly lower today.
None of this is specific to NWLI, it just says that life insurance today, with the legacy minimum guarantees promised to annuitants years past, is not that great a business. Whether 0.4x book more than prices in the environment is a lot more difficult to answer. I guess it really depends on each individual's return expectations.
"I have no issues with NWLI. If you are a long term holder with issues of NWLI, one must ask themselves, what is different today than 10 years ago, 20 years ago, 30 years ago, etc. etc."
I have a ton of issues with NWLI. The real question should be "Why hasn't anything changed at NWLI?" or "Isn't it about time that something changed at NWLI".
My god these people (NWLI management) have their head in the sand when it comes to the stock.
the difference between 10-20-30 years ago is higher interest rates. it's very hard to earn a respectable ROE given the very low interest rates. but, i think this is MORE than factored into the price/book. also sharply higher rates will hurt the company.
does suing the company make sense? doubtful. if the ceo isnt smart enough to create value someone will have to take action but you are going to need to see some restless shareholders.
found this i posted this 9 years and 9 months ago
so nothing has changed nothing has happened
and no one wants to accomplish anything
Is there a Lawyer who want to have some
By dutchassets . 9 years 9 months ago . Permalink
I believe the Moody family who controls NWLIA is hoarding money to the detrement of minority shareholders.
They refuse to pay a dividend and at the same time refuse to buyback shares when the stock is trading at a 50% discount to its intrinsic value.
I believe it might be worthwhile for a lawyer to start a suit aganist them. I would be the first person to join in but being outside the country find it difficult if not impossible to find such a lawyer.
By the way, there is precedence. In the 1020's minority shareholders of Ford sued and won, forcing Henry to Pay out part of the profits they made in Dividends.
Henry got so mad he actually bought out the remaining shareholders (at a nice premium I might add. Although those shareholders would have been better off keeping their shares but that is another story and up to us as individuals).
Now if some US shareholders got to get together they might be able to force the Moody's hand especially as the other company they control pays a very nice dividend indeed.
Either way if they buy shares back or, if they pay a dividend we the minority shareholders win.
I agree. As I posted last week, NWLI Traded up over 100 percent a book value as recently as 2007. It seems to hit that level every once in a while. I think it will again in the next few years and the return to that point will be very good.
not worthwhile to respond to the apologists for bad managemen, hoarding cash, and not developing anything of note. so I will not lower myself to comment on this additional mediocraty
I repeat the only way to get something done here is to sue this excuse for bad management
in court to get anything worthwhile done.
notice this is from another new shareholder tryng to bottom fish rather then make this a respectale nd worthwhile investment for both majority and minority shareholders