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National Western Life Group, Inc. Message Board

  • nlevis2 nlevis2 Jul 21, 2010 4:39 PM Flag

    I guess everyone thinks the world is gonna end...

    At least if that happens NWLI will be off the hook for life claims!

    Too much pessimism in NWLI...... It has earned 140MM plus whatever they earn this Q since the 2008 bottom, yet the stock is around the same price....

    Bonds are rallying.

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    • I wonder if it is not the outstanding punitive damages claim for $150 million which is holding this back.

      Reality is, even if they have to pay this which I believe is very unlikely, will still be a very cheap stock.

      • 1 Reply to bbarberayr
      • Interesting. Have seen other posts on this issue. However, most lawsuits are not warranted. If the party is in the right, most of the time they will settle out of court for a much smaller amount than they are asking for....

        The other issue is obv. DAC accounting.... ITs good to see DAC falling from 780MM to 626MM and I hope to see a further reduction of this amount.

        However, unless a lot of people die very suddenly, this number should be recouped by NWLI over the life of the policy so I do not think it is a Baloney asset as long as the company is profitable and need not be liquidated....

        Even in liquidation, the policies themselves have intrinsic value which should be worth the DAC or more to an acquiring life insurere....

        Anyways, with NWLI its not in any rush to cash out as they are earning a nice ROI and bonds have rallied nicely for them...

        If I were NWLI's bond guy (think its the CFO who is a nice guy, called him up once to talk about DAC) I would be cashing in on falling yields by taking profits on longer dated bonds and getting into shorter maturity bonds (say with a year left) or at least go long TBT calls or something as the bond market looks, well, a bit toppy. Hopefully, management can act swiftly and put some profits on the books from the recent "flight to quality" although I am sure this is a misnomer. I( would rather own foreign corporates or multi-nat corporates personally with a short maturity than anything in the muni or T bill space..... still good money to be made.

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