Performance Review
Below is the Insurance Watch List from November 6, 2012 and the subsequent performance. The stocks are listed in the order that they were on the watch list.
| Symbol | Name | 2012 | 2015 | % chg |
| TWGP | Tower Group Inc. | 17.68 | 2.5 | -85.86% |
| PKIN | Pekin Life Insurance Company | 10.8 | 12.4 | 14.81% |
| ASI | American Safety Insurance Holdings Ltd. | 17.22 | 30.25 | 75.67% |
| FRFHF | Fairfax Financial Holdings Limited | 372.45 | 496.5 | 33.31% |
| NSEC | National Security Group Inc. | 8.15 | 13.5 | 65.64% |
| GTS | Triple-S Management Corporation | 17.72 | 20.59 | 16.20% |
| THG | The Hanover Insurance Group Inc. | 35.61 | 84.25 | 136.59% |
| OB | OneBeacon Insurance Group, Ltd. | 13.01 | 14.39 | 10.61% |
| CRVL | CorVel Corporation | 42.74 | 33.2 | -22.32% |
| MHLD | Maiden Holdings, Ltd. | 8.54 | 15.55 | 82.08% |
| ERIE | Erie Indemnity Company | 66.3 | 87.46 | 31.92% |
| MIG | Meadowbrook Insurance Group Inc. | 5.72 | 8.65 | 51.22% |
| TDHOY | T&D Holdings, Inc. | 5.31 | 6.55 | 23.35% |
| WSH | Willis Group Holdings Public Limited Company | 34.87 | 44.61 | 27.93% |
The entire watch list gained an average of +32% which is 30% less than the iShares US Insurance ETF (IAK) in the same period of time. At the time, we had a strong interest in two stocks, The Hanover Insurance Group (THG) and Maiden Holdings (MHLD). Our general assessment of both stocks was fairly accurate as THG has the top performance at +136% and MHLD was the second in performance at +82.08%.
At the time, we thought that MHLD was undervalued compared to AmTrust Financial Services (AFSI). We did a side-by-side comparison of the fundamentals to justify our view on both stocks. Below is the comparative performance:
AFSI (in red) gained +181% compared to MHLD’s gain of ~82-85%. As far was we can tell, MHLD is tracking closely to the performance of AFSI but by a dramatically lower magnitude.
The third ranked stock, in terms of performance, was American Safety Insurance Holdings (ASI) with a gain of +75% which was acquired by Fairfax Financial Holdings (FRFHF), considered to be the Berkshire Hathaway of Canada.
Technical Overview
So far, it appears that the iShares US Insurance ETF (IAK) is about to put in a double top or break through to a brand new high since the low of 2009. The chart below has applied support levels based on the work of Charles H. Dow, co-founder of the Wall Street Journal. The ascending $39.86 level has been a support only once in late October 2011. Since that time, IAK has kept a considerable distance from the $39.86 “support” level. It would take a –23.84% decline to achieve the $39.86 level and a fall of –36.83% to get to the Dow Theory fair value level of $33.06.
Insurance Watch List
Below is the Insurance Watch List for October 30, 2015 and the analyst estimates for the respective stocks in the coming year.
