Since Thursday's close NWLI outperforming stocks like MFC, MET and AEG by 10% - 15%.
Probably most holders are longer term in NWLI and more short-termers in the bigcaps playing the rate rise.
Reads to me like the son is putting things in place to better run the business and reward shareholders:
"While we do not currently have any specific
plans in place, the presence of NWLGI will
facilitate strategic initiatives going forward
such as forming new subsidiaries for business
opportunities, acquiring other businesses, and
providing for corporate finance and capital
ANAT is different because of it'sP&C business and P&C valuations have rebounded much better than life valuations.
They still have the Moody discount, but their 2006 p/b of 0.9 has only dropped to a p/b of 0.7. Other pure P&C companies have rebounded better.
I agree, they are the cheapest. And there are reasons for that like the multiple vote shares, Moody poor capital management, etc.
But these same issues have always existed and are the reason people have been able to buy shares so cheaply over NWLI's lifetime.
If you look instead at the ration of a stock's P/B in the last cycle to now, the ratio's are pretty much in line.
Eg. LNC 2006 p/b = 1.53, now 0.75
MET 2006 p/b = 1.4, now 0.66
NWLI 2006 p/b = 0.91, now 0.48
So, the valuations have stayed in the same ratio with the industry over time.
At some point, maybe in our lifetimes, the Moody's will change capital allocation policies or one of the heirs will want out or something, so there will be a 1-time winfall for the holders at that time as valuations move to more in line with the industry, but for now, the company is being run as it always has and valued as it always has, so we just have to trade with that in mind.
Looks like the deal for Chinese insurer Anbang to buy FGL is having some problems. Maybe it is just a hiccup in this process as Chinese companies aren't used to dealing with US regulators, or maybe they want to walk away.
I'd like to see the FGL deal go through as it increases the scarcity value of life insurers and will make it easier for stocks like NWLI to go up once the interest environment turns.
Take a look at either stocks. Pretty sure that there is not 1 life insurer who is worth more than they wore 10 years ago. It is not a management issue unless coincidentally all life insurers hired poor CEO's in 2007.
The reality is the valuation that the market is willing to pay for life insurers has gone down over the last 10 years due to fears about interest rates, etc.
Did a search of the Panama Paper Leaks and no NWLI in there. Wondered if some of their offshore insurance sales would have gotten caught up in people trying to avoid taxes, but at this level, they have not.
dsouth7777, you really are missing the main themes here. You are picking on NWLI for industry issues, not company issues. I agree there would likely be a 1-time valuation rerating if things happenned like getting rid of the dual share structure, increasing the dividend, but these factors were in play 10 years ago, and it is why the shares were cheaper than most life insurers then and now. I will try and explain 1 more time.
A 10 year chart comparing NWLI to MET, PRU, MFC and KCLI show NWLI at the top., so the company is doing as well or better than the industry or it would be worse.
MET had a p/b of 1.4 in 2006, now it is 0.6, so 43% or 10 years ago
NWLI had a p/b of 0.9 in 2006, now it is 0.5, so 56% of 10 years ago
So NWLI has actually shown less loss in market value than large cap MET, another sign that it is being run well.
You can say they've produced a loss over 10 years, but the so has pretty much every other life insurer, so saying NWLI are "fools" is incorrect as they have increase book value significantly and the valuation discount is outside their control as it applies to all other life insurers as well.
dsouth777, run a compare chart of NWLI again other life insurers and you'll see it is an industry thing, not a NWLI specific thing. ON most timeframes, NWLI is one of the better, if not best, performing stock.
Life insurance is down, because people are worried about low rates and what happened to the Japan insurers when their rates went really low. When rates form up, they will all rise.
And you can't say they should be doing better like the P&C insurers as that is a completely different business and valuations are different.
Earnings a bit weak for Q1. There was a minor lawsuit hit (which they are appealing), but likely the bulk of the decline was due to lower investment returns, which we will need the full financial reports to verify.
Interesting quote in the press release:
"There is clearly a great deal of uncertainty in the financial markets which may be manifested through increased levels of volatility. The timing and the future direction the Federal Reserve may take on interest rates adds to the level of uncertainty. This backdrop is a challenging one for the life insurance industry and, in this context, tests our ability to generate growth."
If they really believe this, it helps build the case that they should look at capital management ideas. The stock repurchase idea would be the obvious way to generate EPS growth per share.
The other thing you have to remember is the reason we all have been able to buy it so cheap is because of its lack of dividend, the Moody ownership, etc.
AT some point this will change and, whoever owns it then, will benefit, but in the meantime, it seems to be trading in line with most lfeco's.
Re FFG, they a,so have a P&C division, so maybe that is why the higher ROE and P/E. I know when I used to sell software to insurance companies and they were still called Farm Bureau Mutual, they had a good reputation as well.
Look at it compared to the TLT - 20 year bond and there is a pretty strong inverse correlation.
Reality here is a small, family controlled company will trade at a lower valuation to a widely held large cap. SO run a chart compare of MET to NWLI and NWLI looks pretty good.
The other reality is, no-one will pay up for life insurers in the current rate environment as the risks are too high and ROE's too low. People remember the troubles the Japan insurers got into a few decades ago from low rates and are worried about reinvestment risk.
You either need to be patient and wait for rates to rise, or I'd just move on and find other things.
It's not a NWLI thing, it's a life insurer thing. Look at small cap KCLI at 58% of book. Even large caps like MET at 71% of book.
The market went up, because rate and the expectation of higher rates went down. Unfortunately, that has the opposite effect on life insurers.
Reality is, when rates rise, life insurers rise. Been that way for a few years now. And when rates finally do move up for real, life insurers will be one of the price beneficiaries.
I tend to agree. The father had no need for money and wasn't interested in pushing through a lot of changes, but the son has often been a selling of his option stock implying he needs the money to support his lifestyle. Sure, he will get a raise, but a dividend would help him as would an increasing stock price
At its regular meeting on March 14, 2016, the Board of Directors of National Western Life Group, Inc. (the "Company") appointed Ross R. Moody ("Mr. Moody"), the Company's President and Interim Chief Executive Officer, as Chairman of the Board, President and Chief Executive Officer. Mr. Moody's compensation will not be changing as part of this appointment. The Board also appointed Robert L. Moody, Sr. to the newly created employee position of Chairman Emeritus, for which he will receive monthly compensation of $1,000.
The big difference is AEL and NWLI are life insurers, where MKL and WTM are P&C insurers.
The stock market has been continually worried about the life insurers since the financial crisis due to their long time period of liabilities and corresponding investments, whereas the P&C insurer valuation has rebounded nicely as it is a simpler business with shorter term funding requirements and the ability to adjust premiums yearly as conditions change.
All lifeco's from the the big MET, PRU, MFC are valued cheaply, so it is not just a small company thing, but an industry concern. If rates stay low for 20 years like they have in Japan, there could be some serious issues for some of the life companies.
It's not the company that's an issue. it's the market and the China factor. I think at this price and value, it is hard to go wrong, but I would keep it a fairly small part of your portfolio as part of normal risk management.
What's the issue with KCLI? Were at $4. Announced a buyout of small shareholders and stock jumped to $47. Stock got over $50 as buyout approached (buyout was for $52.50). Buyout ended and stock moved to OTC Market, so has fallen back past $44 to $37.
Book value is around $70 and they have a good dividend.
Could be a good buy - probably temporary pressures of selling after the buyback and over market weakness causing problems.
Personally, I think NWLI is a better run company and it does use more conservative accounting, but KCLI is fine too.