Maryland Insurance

The last six months have left the owners of damage and accident insurance business stocks confused. The benefits for businesses have increasingly floated, stock prices have engulfed always lower. The reason: many investors believe that the profits of insurers during the year 1986 will not be used seen this year. The awareness, coupled with the eruption of year-end tax selling, mistreated stocks. If these investors to sell is hot discussed earlier on Wall Street. But what happens with major players, analysts draw attention to a group of stocks Specialty Insurance said it is in circles around the market this year.

Specialty insurance underwriting specific risks, sometimes difficult to achieve elsewhere. Because a small niche market with little or no competition, they are less regularly subjected struggles reducing their prices, click on the titles of more sinister. Mr. Joseph Reed Olmstead Morgan in Los Angeles:”The money was rapid for several% of companies now that the special players will be able to recordings.”Specialty Insurance issues are not followed in general on Wall Street And so they can sell at low multiples. Donald Zerbarini, an analyst-Prescott Ball & Turben, makes them, took the average P / E for these stocks in 1987 is estimated at 8.2 result, compared to 9.2 for major damage and risks of accident and 13.6 Standard & Poor’s 500 stock index. ”We have seen results from higher plastics special insurers, and we will see do well, simply because it focuses better than large companies,’’said Zerbarini. ”You know, their markets so that their products prices much better than most lines of business. So the return of growth is more predictable.

A perfect example of a company with a yield of continuous growth, said Zerbarini, Nobel Insurance Ltd, which is based in Bermuda, eight years ago, was 24 companies in cases of explosives, he Not surprisingly, had a difficult time growing enough to cover their activities. The name is a tribute to Alfred Nobel inventor of explosive nitroglycerine and the income of dynamite: since 1979, grew by 26%. Vita Marino, an analyst with pare-Mark, a research firm specializing in insurance, Nobel added that management has a shot-up offers conséquente”garder their underwriting policy surprisingly profitable.”She believes merit the company $ 1.40 to $ 1.80 in 1986 and this year, against 88 cents in the year 1985. Another favorite is Avemco Marino, which is based in Frederick, Maryland, and the nation’s largest insurer of private airplanes. The company has a PER of 10.7 in 1987 estimated revenues of $ 2.50, 13% increase in 1986. Herbert Good Friend Prudential Bache make Progressive Corp. Beachwood, Ohio, underwrites auto insurance high risk for pilots.

The company is able to double or triple the normal costs of awards for its coverage, and Good Friend benefit up $ 2.05 a share, in 1986 and $ 2.65 in 1987. Other insurers have été”tirant of this market, which means, Progressive can now ensure better quality and increase risks applicable”he says. Analyst at Salomon Brothers and Merrill Lynch on the outlook for WR Berkley, an insurer in Greenwich, Connecticut, which has three lines of Special Affairs: excess capacity and coverage, such as protective measures outfielders’ arms and legs Film stars, heavy property damage and accidents of turnover in the Midwest nonlitigious and solid reinsurance business. A few years ago, the company has encountered difficulties in some injudicious subscription in the oil sector, but losses are now behind him, say analysts. Its Verdienste”Bild is super, I estimate for 1986 of $ 2.45, $ 4.05 for 1987 and $ 4.75 in 1988,’’said Michael A. Salomon’s Frinquelli.

In 1987, it is the result of a P / E of only 6.7, Berkley and is very attractive at this price.”Fairmont Financial, which is based in Burbank, California, is the choice of Morgan’s Olmstead Joseph Reed . Fairmont has carved a lucrative market Underwriting Workers’ Compensation, especially in California. ”It provides small and medium-sized enterprises, too small for large insurers. But it can not selectively, since its market is so big’’says Reed. And so Fairmont run out of good business in California, the company develops in Colorado and Texas. Reed estimates the insurer deserve a share of $ 2.20 in the year 1987, ie that he is on sale only 7.6 times the result. Fairmont”aurait a multiple of 12”, says Reed, and, since investors, a magnifying glass, I think it will go.