Insurance Stock Drops

This week I’ve noticed a bunch of the insurance stocks that I follow have dropped a good bit. Here is the list:

• ACE
• AGII
• ENH
• EMCI
• ESGR
• RE
• IPCC
• MXGL
• MIG
• NATL
• PRE
• PTP
• RLI
• NAVG
• TWGP
• UFCS
• VR

I haven’t delved too deeply into the reason for the drop in stock prices, but I’m guessing its mostly related to recent talk about interest rate hikes. Hiking up the interest rates I believe has a negative effect upon the prices of most bonds, which are a huge part of insurance company investment portfolios.

With some research I think one could find some insurance companies that might have sold off too much as result of interest rate fears. Alternatively, one could also devote some time to research insurance companies that devote an above average percentage of their investment portfolio to equities as I think equities would tend to outperform bonds in an environment where interest rates slowly creep up (as they eventually will).