I am looking to make a move on an insurance play. I have been looking at this sector since March, I know I should have moved earlier, but I played BofA and Genworth heavy instead. I still feel the growth is there. I am looking at MetLife and TRV. I would like to get your opinion of the two companies .. I know Met is into just about everything, Financials, Mortgages (w. First Horizon move last year), P and C and have a global view ... TRV is simply Personal lines basically in US and have a large Commercial exposure. I like the idea of the safe play with TRV, but how much can this stock really move over a 6 to 12 month period as compared to MetLife which seems to be in position to simply acquire growth in Asia and the US through take over.
Well the AIG news today tells me I made the right move! Although both have slipped some since the 18th, MET just seems to be positioning itself for more moves down the road. This move is huge globally for MET especially in Japan. I think that companies will look back on the end of 2008-2009 and regret not be aggressive with M & A's ..
Personally, I can't help but look at this $15B deal and think its a favor to the Gov't? AIG owes $84B to fed's and noway pf paying it back without asset liquidation, but Obama is against large Financial companies? LOL yet he essentally allows METLIFe to become the new AIG .. too big to fail?
I've followed this stock for a while and know the company. It is a safe stock but do not expect growth in price until and unless Sr. mgmt becomes bolder and more aggressive in managing expenses. They have the ability to rule commercial insurance now that AIG will be whacked down to a much smaller commercial insurer when the dust settles. They have the business and will continue to be a major P&C player. The question is how efficient they are and can they do it cheaply enough. Success in this sector depends on investment return (very conservative and highly regulated) price of product (regulated and highly competitive) and service (have to separate yourself from the pack but not overdo it). If your "back office" operation is efficient, smooth, paperless and saves $, you can win. Jury still out on whether THIS mgmt team has the intestinal fortitude to do it right. Good luck my friend.
Expenses are an issue, but pricing is a bigger issue. While pricing is to a degree regulated, you still must have actuarial and underwriting discipline. TRV is pricing as if top line is all that matters. This is a huge risk for them down the road.