The Insurance and Financial Review XLF (Financial Sector ETF) -6

[Pages:8]The Insurance and Financial Review

MARKET PERFORMANCE OF FINANCIAL SERVICES STOCKS FOR THE QUARTER ENDING JUNE 30, 2012

In the second quarter of 2012, the US stock market decreased by 2.8% as measured by Standard & Poor's 500. Financial services stocks, as measured by the XLF Financial ETF decreased 6.9%. Insurance stocks, as measured by the Nasdaq Insurance Index, increased by 3%. The average return for all 146 companies included in

Table 1

Title Insurers Finance Cos.

this study was negative 1.2%. Five sub-sectors outperformed the S&P 500 and six underperformed. Four sub-sectors posted positive returns and seven posted negative returns for the quarter, as shown in Table 1. Top performing categories included Finance Companies and Title Insurers.

Median Average Total Return 3/31/12 - 6/30/12 7.8 7.4

Nasdaq Insurance Index

3.0

Property and Casualty Reinsurance Cos.

2.5

Primary Property Casualty Underwriting Cos.

0.6

Insurance Brokers

-2.7

Standard & Poors 500

-2.8

Multi-Line Insurers

-4.5

XLF (Financial Sector ETF)

-6.9

Health Insurers Securities Brokers & Asset Management Cos. Life & Annuity Cos. Claims Adjusters Financial Guarantors

-8.0 -8.3 -10.5 -16.1 -19.2

Global economic fears weighed heavily on market sentiment in the second quarter of 2012 and influenced performance for some insurance and financial companies. Reemerging concerns over the European debt crisis caused a near reversal of last quarter's results for many companies with higher perceived risk. Property and Casualty Reinsurance Companies and Primary Property Casualty Underwriting Companies did

well relative to the market on continued reports of rate firming and benefitting from mild winter weather.

The best performing category was Title Insurers, with a 7.8% median average return in the second quarter and no negative performers. Investors Title led the category and was the 9th top performer overall with a 20% return in the second quarter as they were added to the Russell

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The Insurance and Financial Review

3000 Microcap Index. Positive earnings resulted

Partners stock declined amid ongoing SEC

from the combination of increased revenues from

investigations related to prior accounting issues.

refinancing activity due to low interest rates and

Security National Financial was an outlier

reduced costs from actions taken after the

to the Life & Annuity category with a 73% return

housing crisis. Investors Title's revenues

for the quarter, in contrast to a -10.5% median

increased 11.9% versus the prior year period,

average return for the category. Security

primarily due to a 10.1% increase in net premiums

National's completed acquisition of North

written and net income increased to $0.67 per

American Life unit Trans-Western Life, as well as

diluted share vs. $0.46 per diluted share in the

settlement of a Wells Fargo funding lawsuit

prior year period.

contributed to their ranking as the top performing

Finance Companies as a category performed 2nd best, with a median average return

stock. The 10 best performing and worst

of 7.4% and four of the top ten stocks. Asset

performing financial services stocks are given in

Acceptance Capital and Imperial Holdings

Tables 2 and 3, respectively. The performance of

returned 43.5% and 43.4% respectively, Encore

other individual stocks and categories is given in

Capital returned 31.4%, and Portfolio Recovery

Table 4.

Associates 27.2%. Imperial's stock saw a rapid increase resulting from settlement of a probe related to their premium finance business in which they agreed to pay an $8 million penalty under terms of a non prosecution agreement with

Table 2: Ten Best Performing Financial Services Stocks

Total Return 3/31/12 - 6/30/12

the U.S. Attorney's Office.

Security National Financial Corp

73.0

Property Casualty Reinsurers and Primary

Kingstone Companies Inc

65.6

Property Casualty Underwriters outperformed the

Asset Acceptance Capital Corp

43.5

S&P 500, with respective 2.5% and 0.6% median

Imperial Holdings Inc

43.4

average returns in the second quarter. Kingstone

Homeowners Choice

40.4

Companies, the 2nd best performing stock overall

Encore Capital Group

31.4

for the quarter and 1st in the Primary Property

Portfolio Recovery Associates

27.2

Casualty Underwriters category, experienced very

Hilltop Holdings Inc

22.9

low loss ratios due to the warm winter weather

Investors Title Co

22.0

and benefitted from their conservative fixed

United Fire Group

20.1

income investments.

Financial Guarantors were the worst performing category for the 2nd quarter, with a -19.2% median average return. MGIC and Radian were the worst performers of the group with -41.9% and -24.3% returns. MGIC's new mortgage guarantee business written in 2009 and 2010 has had just 4% and 11% loss ratios respectively, but poor quality business written prior to 2008 resulted in first quarter losses of $337 million compared to $310 million last year. Concerns over MGIC's ability to remain complaint with

Table 3:

Ten Worst Performing Financial Services Stocks

Total Return

3/31/12 - 6/30/12

Life Partners Holdings

-45.4

Assurance America

-43.8

MGIC Investment Corp

-41.9

Affirmative Insurance

-37.7

Genworth Financial Inc

-32.0

Jefferies

-30.8

regulatory capital requirements have also affected

Kingsway Financial Services

-25.6

the stock.

Morgan Stanley

-25.5

Life Partners was the worst performing

Phoenix Companies Inc

-24.5

stock with a -45.4% return for the quarter. While

Radian Group Inc

-24.3

the Insurance Broker category reported returns

comparable to the S&P 500, -2.7% vs. -2.8%, Life

*Nasdaq Insurance Index data is not available for Total

Return and reflects price change of index only.

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The Insurance and Financial Review

Table 4

Title

Investors Title Co.

ITIC

Stewart Info Services

STC

Fidelity National Financial

FNF

First American Financial

FAF

Median Average

Finance Cos.

Asset Acceptance Capital Corp. Imperial Holdings Inc. Encore Capital Group Portfolio Recovery Associates Asta Funding World Acceptance Corp. White River Capital QC Holdings Advance America Nicholas Financial Credit Acceptance Corp.

AACC IFT ECPG PRAA ASFI WRLD RVR QCCO AEA NICK CACC

Median Average Property Casualty Reinsurance Cos.

PartnerRe Ltd. Everest Reinsurance Group Ltd. Montpelier Re Platinum Validus Holdings Ltd. Aspen Insurance Holdings Greenlight Capital Re Berkshire Hathaway Flagstone Reinsurance Holdings RenaissanceRe Enstar Group Ltd.

PRE RE MRH PTP VR AHL GLRE BRK.A FSR RNR ESGR

Market Price 3/31/2012

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

$46.72 $14.21 $18.03 $16.63

$56.93 $15.35 $19.26 $16.96

21.9% 8.0% 6.8% 2.0%

22.0% 8.0% 7.6% 2.5%

7.4% 7.8%

$4.74 $2.67 $22.55 $71.72 $8.17 $61.25 $22.36 $4.16 $10.49 $13.19 $101.01

$6.80 $3.83 $29.62 $91.26 $9.37 $65.80 $22.75 $4.19 $10.50 $12.82 $84.43

43.5% 43.4% 31.4% 27.2% 14.7% 7.4% 1.7% 0.7% 0.1% -2.8% -16.4%

43.5% 43.4% 31.4% 27.2% 14.9% 7.4% 2.9% 1.9% 0.1% -2.0% -16.4%

7.4% 7.4%

$67.89 $92.52 $19.32 $36.50 $30.95 $27.94 $24.63 $121,900.00 $7.87 $75.73 $98.99

$75.67 $103.49

$21.29 $38.10 $32.03 $28.90 $25.42 $124,945.00 $8.01 $76.01 $98.94

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11.5% 11.9% 10.2% 4.4% 3.5% 3.4% 3.2% 2.5% 1.8% 0.4% -0.1%

12.4% 12.4% 10.7% 4.6% 4.3% 4.1% 3.2% 2.5% 2.3% 0.7% -0.1%

The Insurance and Financial Review

Property Casualty Reinsurance Cos. (cont'd.)

Axis Capital Holdings Ltd. XL Group plc Maiden Holdings Ltd. Endurance Specialty

AXS XL MHLD ENH

Market Price 3/31/2012

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

$33.17 $21.69 $9.00 $40.66

$32.55 $21.04 $8.68 $38.32

-1.9% -3.0% -3.6% -5.8%

-1.1% -2.5% -2.6% -5.0%

Median Average

Primary Property Casualty Underwriting Cos.

Kingstone Companies Inc. Homeowners Choice Hilltop Holdings Inc. United Fire Group Eastern Insurance Holdings Allied World Assurance Cincinnati Financial AmTrust Financial Services Infinity P&C Corp. Travelers Companies Inc. WR Berkley Corp. Allstate Corp. Arch Capital Group Ltd. Chubb Corp. Navigators Group Inc. Baldwin & Lyons National Interstate Corp. American International Group Inc. White Mountains Global Indemnity plc Alleghany Corp. Loews Corp. Alterra Cap Holdings Employers Holdings American Financial Group Inc. EMC Insurance Group Inc. ProAssurance Corp. ACE Ltd.

KINS HCII HTH UFCS EIHI AWH CINF AFSI IPCC TRV WRB ALL ACGL CB NAVG BWINB NATL AIG WTM GBLI Y L ALTE EIG AFG EMCI PRA ACE

$3.18 $12.70 $8.39 $17.89 $14.60 $68.67 $34.51 $26.88 $52.33 $59.20 $36.12 $32.92 $37.24 $69.11 $47.24 $22.38 $25.58 $30.83 $501.72 $19.49 $329.10 $39.87 $22.98 $17.71 $38.58 $20.09 $88.11 $73.20

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$5.24 $17.60 $10.31 $21.33 $17.00 $79.47 $38.07 $29.71 $57.67 $63.84 $38.92 $35.09 $39.69 $72.82 $50.05 $23.24 $26.59 $32.09 $521.75 $20.25 $339.75 $40.91 $23.35 $18.04 $39.23 $20.20 $89.09 $74.13

2.5% 2.5%

64.6% 38.6% 22.9% 19.2% 16.4% 15.7% 10.3% 10.5% 10.2%

7.8% 7.8% 6.6% 6.6% 5.4% 5.9% 3.8% 3.9% 4.1% 4.0% 3.9% 3.2% 2.6% 1.6% 1.9% 1.7% 0.5% 1.1% 1.3%

65.6% 40.4% 22.9% 20.1% 17.0% 15.7% 11.5% 10.9% 10.7% 8.6% 8.0% 7.3% 6.6% 6.0% 5.9% 5.1% 4.4% 4.1% 4.0% 3.9% 3.2% 2.8% 2.2% 2.2% 2.2% 1.6% 1.4% 1.3%

The Insurance and Financial Review

Market Price 3/31/2012

Primary Property Casualty Underwriting Cos. (cont'd.)

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

HCC Insurance Holdings Inc. GAINSCO INC. Horace Mann National Security Group Inc. Selective Insurance Group American Safety Insurance Hallmark Financial Services Safety Insurance Group Inc Argo Group International Markel Corp. SeaBright Holdings Donegal Group Inc. State Auto Financial First Acceptance Corp. Hanover Insurance Group RLI Corp. CNA Financial Corp. Meadowbrook Insurance Tower Group Inc. Erie Indemnity Co. Unico American Corp. Proggressive Corp. Universal Insurance Holdings United Insurance Holdings 21st Century Holding OneBeacon Insurance Group Old Republic International Corp. Kingsway Financial Services Affirmative Insurance Assurance America

HCC GANS HMN NSEC SIGI ASI HALL SAFT AGII MKL SBX DGICA STFC FAC THG RLI CNA MIG TWGP ERIE UNAM PGR UVE UIHC TCHC OB ORI KFS AFFM ASAM

$31.17 $9.00 $17.62 $8.63 $17.61 $18.85 $7.89 $41.64 $29.87 $448.94 $9.09 $13.67 $14.61 $1.39 $41.12 $71.64 $29.33 $9.33 $22.43 $77.94 $11.20 $23.18 $3.89 $5.95 $4.50 $15.41 $10.55 $0.80 $0.53 $0.13

$31.40 $9.00

$17.48 $8.51

$17.41 $18.75

$7.80 $40.64 $29.27 $441.70

$8.89 $13.28 $14.05

$1.34 $39.13 $68.20 $27.72

$8.79 $20.87 $71.61 $10.16 $20.83

$3.41 $5.25 $3.96 $13.02 $8.29 $0.60 $0.33 $0.07

0.7% 0.0% -0.8% -1.4% -1.1% -0.5% -1.1% -2.4% -2.0% -1.6% -2.2% -2.9% -3.8% -3.6% -4.8% -4.8% -5.5% -5.8% -7.0% -8.1% -9.3% -10.1% -12.3% -11.8% -12.0% -15.5% -21.4% -25.6% -37.7% -43.8%

1.2% 0.0% 0.0% -0.3% -0.4% -0.5% -1.1% -1.2% -1.6% -1.6% -1.6% -2.0% -2.8% -3.6% -4.1% -4.3% -5.0% -5.2% -6.1% -7.5% -7.7% -10.1% -10.2% -11.8% -12.0% -14.1% -20.0% -25.6% -37.7% -43.8%

Median Average

0.3% 0.6%

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The Insurance and Financial Review

Insurance Brokers

Brown & Brown Inc. Willis Group Holdings Arthur J Gallagher Marsh & McLennan Fortegra Financial Corp. Aon Corp. National Financial Partners Life Partners Holdings

BRO WSH AJG MMC FRF AON NFP LPHI

Market Price 3/31/2012

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

$23.78 $34.98 $35.74 $32.79 $8.36 $49.06 $15.14 $4.07

$27.27 $36.49 $35.07 $32.23

$8.00 $46.78 $13.40

$2.13

14.7% 4.3% -1.9% -1.7% -4.3% -4.6%

-11.5% -47.7%

15.0% 5.1% -0.9% -1.0% -4.3% -4.4% -11.5% -45.4%

Median Average

Multi-Line Insurers

Kemper American National Insurance Co. Atlantic American Corp. Assurant Inc. Hartford Financial Svcs.

KMPR ANAT AAME AIZ HIG

-3.1% -2.7%

$30.28 $72.52 $2.88 $40.50 $21.08

$30.75 $71.27

$2.75 $34.84 $17.63

1.6% -1.7% -4.5% -14.0% -16.4%

2.3% -0.6% -4.5% -13.4% -15.9%

Median Average

Health Insurers

Torchmark Corp. Aflac Inc. StanCorp Financial Group Unum Group

TMK AFL SFG UNM

-4.5% -4.5%

$49.85 $45.99 $40.94 $24.48

$50.55 $42.59 $37.16 $19.13

1.4% -7.4% -9.2% -21.9%

1.7% -6.7% -9.2% -21.5%

Median Average

Securities Brokers & Asset Management Cos

Federated Investors T. Rowe Price Eaton Vance Legg Mason

FII TROW EV LM

$22.41 $65.30 $28.58 $27.93

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$21.85 $62.96 $26.95 $26.37

-8.3% -8.0%

-2.5% -3.6% -5.7% -5.6%

-1.4% -3.0% -5.0% -5.2%

The Insurance and Financial Review

Market Price 3/31/2012

Securities Brokers & Asset Management Cos. (cont'd.)

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

Waddell and Reed Raymond James Financial Knight Capital Group Ameriprise Lazard Franklin Resources Janus KKR & Co. L.P. Och-Ziff Capital Blackstone Group L.P. Goldman Sachs Morgan Stanley Jefferies

WDR RJF KCG AMP LAZ BEN JNS KKR OZM BX GS MS JEF

$32.41 $36.53 $12.87 $57.13 $28.56 $124.03 $8.91 $14.83 $9.28 $15.94 $124.37 $19.64 $18.84

$30.28 $34.24 $11.94 $52.26 $25.99 $110.99

$7.82 $12.89

$7.58 $13.07 $95.86 $14.59 $12.99

-6.6% -6.3% -7.2% -8.5% -9.0% -10.5% -12.2% -13.1% -18.3% -18.0% -22.9% -25.7% -31.1%

-5.8% -5.9% -7.2% -7.9% -8.3% -10.3% -11.5% -12.1% -17.3% -17.4% -22.6% -25.5% -30.8%

Median Average

Life & Annuity Cos.

Security National Financial Corp American Independence Corp Kansas City Life Insurance Symetra Financial Corp Primerica Inc. National Western Life UTG Inc. Protective Life Corp Citizens Inc. Principal Financial Group Inc. Investors Heritage Capital Presidential Life American Equity Investment FBL Financial Group Inc. Lincoln National Corp MetLife Inc. Prudential Financial Phoenix Companies Inc. Genworth Financial Inc.

SNFCA AMIC KCLI SYA PRI NWLI UTGN PL CIA PFG IHRC PLFE AEL FFG LNC MET PRU PNX GNW

$1.41 $4.42 $32.20 $11.53 $25.21 $136.87 $12.50 $29.62 $9.88 $29.51 $20.50 $11.43 $12.77 $33.70 $26.36 $37.35 $63.39 $2.45 $8.32

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$2.44 $5.00 $35.19 $12.62 $26.73 $141.92 $12.50 $29.41 $9.75 $26.23 $17.85 $9.83 $11.01 $28.01 $21.87 $30.85 $48.43 $1.85 $5.66

-9.0% -8.3%

73.0% 13.2%

9.3% 9.5% 6.0% 3.7% 0.0% -0.7% -1.3% -11.1% -12.9% -14.0% -13.8% -16.9% -17.0% -17.4% -23.6% -24.5% -32.0%

73.0% 13.2% 10.2% 10.1% 6.3% 3.7% 0.0% 0.0% -1.3% -10.5% -12.9% -13.4% -13.8% -16.6% -16.8% -17.4% -23.6% -24.5% -32.0%

Life & Annuity Cos. (cont'd.)

Median Average Claims Adjusters Crawford & Co. (B Shares) Median Average

CRDB

The Insurance and Financial Review

Market Price 3/31/2012

Market Price 6/30/2012

Percent Increase/ - Decrease

Total Return

-11.1% -10.5%

$4.90

$4.09

-16.5% -16.1% -16.5% -16.1%

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