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.
Great win. Not sure of how long the project is, but if they can be successful here, could open the doors for a lot of revenues in China.
That's a surprisingly high short interest. When I check the other lifeco's, they don't seem to have the same levels. Plus, you know it is real shorts, not hedging against options as NWLI doesn't trade options.
Not sure why people would be so aggressive against such a well-capitalized, profitable lifeco. Perhaps because the dividend is so low, it is a cheap way to bet against the overall life insurance industry, but still, anyone who did any due diligence would see this is not another HIG.
Hope you are right. It's been my largest position for over a year now. I'm very confident it works out, but didn't see a catalyst. I thought it's been earnings, but perhaps you are right on the fund selling.
Anyhow, looks like NWLI is moving now. Most of the lifeco's seem top be responding well to the rise interest rates - MET at a 52 week high for example.
That's 2 quarters in a row now that we've had a good response to earnings. Previously, the earnings were usually good, but nobody cared. Hopefully this is the start of the recognition of value here which gets us above $200 this year.
Yeah. Been having problems lately too. Looks like Marissa Mayer is making some chancres which is great, but a few bugs I guess. I find I can post OK if I flip to internet explorer instead though.
The way I look at this is with NWLI, you have the opportunity to buy a company, that increases the value of your investment by 20% a year, plus you are buying it for less than half price, so you've got great downside protection.
In a good market like 2006 or 2007, someone will be willing to pay full price for this, so I can just wait, have the value of my investment grow by 20% a year and at some point, cash out both the 50% discount on purchase price plus the 20% annual growth I received.
If you take the increase in book value for the year and divide that by the current stock price, you get a return of almost 20%. That is outstanding and hard to see it will last in a conservative investment (although I've thought this for a couple of years now).
Not really big news, but thought I would mention:
National Western Life Insurance Company sold the Bixby Office Park at 3010-3030 Old Ranch Pky in Seal Beach, CA to Parallel Capital Partners for $85 million, or about $307 per square foot.
I wonder if the surge the last couple of days is not somehow related to fast-trigger traders trying to buy MGIC Investment (MTG). If yuo look at the 2 year chart for MGIC and MTG, they are very similar in shape. We only trade about 60,000 MGIC a day on average versus 9 million on MTG, so a couple of bad trades could be causing this.
Hard to believe traders don't know what they are buying, but possible.