Life Insurers Lead This Value List

Several years ago, Henry Carstens of Vertical Solutions and I did a study on stocks in the S&P 500. We found that those stocks in the index that traded below book value and had solid balance sheets outperformed the overall market by a wide margin. I have kept track of this approach, and the results have continued to be solid in practice as well as theory. This morning, I sat down and ran the screen to see what turned up as we head toward the end of the year.

The first and most obvious conclusion is that life insurance stocks remain very cheap. These companies have seen net interest margins pressured by the semi-permanent low long-term interest rates. To compound the problem, the weak economy has made it difficult to increase sales and profits. Like many banks, life insurers have had to work their way through troubled assets in the wake of the credit crisis. Although most credit issues are in the rearview mirror, they have weighed on profitability and on stock prices....588 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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