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Non-Tech : Insurance cos (proposed buy outs, etc. discussion) -- Ignore unavailable to you. Want to Upgrade?

To: QuietWon who wrote (26)	11/8/1999 1:09:00 PM
From: Carey Thompson	Read Replies (1) \| Respond to of 55

Quiet Won your post speak loudly. Couple of points. First, insurance companies go thru cut throat competition every few years. Some insurers survive and live on to prosper, while others get bought out or disappear. Insurance is a business with cyclical earnings and REVENUES too. During the cut throat days, some insurers simply refuse to write unprofitable business, causing their revenues to shrink. Know what? These are the survivors. Although, it may not look like it, insurers are best evaluated as value stocks with little fixed assets, or lots of liquid assets. As such price to book, price to cash, price to earnings ratios are important evaluation tools. Do not look to earnings or top line growth--you will be disappointed. Also, remember castastrophies happen, for example Hurricanes Floyd and Mitch, the Mississippi River floods, the Northridge earthquake, etc. This causes even more deeper cycles. And know what, insurers do not write off the losses in the year of the castastrophy, but over 3 or 4 years. During the these times of cut throat pricing and castastrophy, long term insurance investors and OTHER well capitalized insurance companies buy the undervalued insurers. Invest with them. Second, prices eventually rebound. Because insurance is a needed service. Individuals need it, shippers need it, companies need. So prices will tend to rebound before reaching cost. Hang in there and keep watching the insurers on your list. I believe the time to buy is now. The West Coast property and casaulty insurers are screaming buys, Mercury General, Fremont General, Twentieth Century, Safeco are my area. The midwestern insurers are covered by the MacAllasters; they appear buys too. Third, the entire text of the article was not provided, only the part covering financial deregulation and its impact on banks and insurers.