Well, we finally hit $200 today and that was sure a long time coming. It's also a new high since the financial crisis low in 2009, but no reason we can't go a lot higher. The life insurers seem to be finally attracting investor attention and the profitability of NWLI through this whole period is better than most and it is at one of the cheapest valuations.
Sorry pmlljl, I was just kidding. It just seemed ironic that the day that you posted about squeezing the shorts was the day we had our best more in probably a month.
You have 2 issues here:
1. You can't really compare a P&C company with a life company in the current environment. Life companies are perceived as much more risky due to the longer duration of their obligations and the reinvestment risk on existing policies. Because P&C pricing can be adjusted much more quickly. Look at even major life companies like MET which are also trading a very low valuation metrics
2. ANAT pays a yield and NWLI (almost) does not. In the current environment where so many people are looking for yield, ANAT will be much more attractive. In the market in general, if you compare 2 equivalent companies valuation wise, 1 with yield, 1 without, the one with yield is getting a much better valuation.
If you believe that interest rates normalize over time, life companies are much better opportunities. On the other hand, if you think the US is turning into Japan, probably the P&C companies do better over the next few years.
The other thing is She’s only acting commissioner, nominated to be commissioner, and she is not popular w/ the Democrats and some Republicans, unlikely to be confirmed.
Looks like it cut off the bottom of the article. Perhaps it is because you are posting large posts you are getting these problems?
Thanks for the link Ben. it is hard to believe that a Texas Insurance Commissioner would out a local company out of business because of an argument with the Brazil government, especially when the Moody's have so much business in Texas and there are no political points to be scored. Still, even though I am pretty sure NWLI is okay here, I've certainly seen it go the other way - for example, an indemnification clause protecting the seller of an asset in contract getting turned over by the courts. Hopefully, she just moves onto something else fairly quickly.
White Mountain Insurance (WTM) popped up on a list I was looking at, so I compared to to NWLI. The reason for that is they are both long term asset growers with low dividend yields.
The thing that stood out is that it trades at twice the P/B, P/E of NWLI, even though NWLI has a better ROE over the last 10 years and has generated more earnings relative to stock price.
Also interesting is that if I look at the long term charts since 1995, the charts are actually quite similar until the start of 2011 when WTM began a strong advance compared to NWLI's pullback.
The main difference between WTM and NWLI is WTM is P&C/specialty insurance, so shorter tail risks and seen as less exposed to long rates. So in my mind, one of 2 things has to happen - NWLI accelerates to the upside and reduces this valuation gap, or NWLI's business deteriorates due to reinvestment issues / poor underwriting, etc.
I believe this is very simply a buy and hold and wait for sentiment to turn stock. I do see the stock well over $300 in the next few years as rates start to rise and risk is seen as being reduced in the lief insurance market.
What browser are you using? I find sometimes Chrome works and sometimes Internet Explorer works with Yahoo Message boards lately.
Nice report, well presents the story, but I'd say you are being conservative in your targets. NWLI traded above 80% of book a lot of time in the good markets of the 1990's and also in the 2003 - 2007 period. I don't see why is couldn't do this again.
At current values, that would put the share price around $300, on say $25 of earnings, that's only a P/E of 12. Pretty reasonable for a safe stock which is growing it's value consistently.