We’re not even midway through earnings season for insurance, and I have a dirty secret to share: Insurance stocks are down on the year on average. 
What a scandal, particularly for an industry with little ties to the sectors in the market with the most credit stress.
Here’s the most recent file on insurance stock performance at earnings. Here are the main lessons, so far:
- Beating earnings by 10% leads to beating the price performance of the index by about 1%.
- Brokers and Commercial Lines are doing the best so far.
- Positive price performance is associated with growing revenues, and rising guidance.
- With the credit furor going on, it is no surprise that financial insurers are doing the worst of all of the subgroups.
- Asset sensitive life insurers are faring badly in the face of good earnings, because with the fall in the equity markets, insurers might have lower asset based fees coming.
Can’t download the file…
Well, AIG is down almost a straight -10%. With your commentary on negative P&C trends (Lehman’s had a report confirming your view as well) plus the ugly life insurance stat, I’m guessing there’s more pain to come, as their consumer financial services will be impacted, and their retirement/annuity businesses are suffering. I’m thinking the right move is to exit on any bounce. (assuming we get one.)