Ms. Giordano: The sectors of the life insurance industry include life insurance, which includes traditional life insurance such as whole life, universal life and term life; non-traditional life (variable life); annuities, which includes fixed and variable annuities sold to groups and individuals. 'Other' includes long-term care, disability and supplemental medical coverage. Breaking down the industry, 60% of earnings are from annuities, 30% are from life insurance and 10% are from 'other.' Our coverage list includes companies that participate in each of these sectors. In the annuity area, the pure play company we cover is Nationwide (NFS). We also cover hybrid annuity and life insurance companies such as John Hancock (JHF), American General (AGC), Jefferson-Pilot (JP), Lincoln National (LNC), MetLife (MET) and Annuity & Life Reinsurance (ALRE), which is a Bermuda-based life reinsurance company. In supplemental medical and disability, we cover AFLAC (AFL) and UnumProvident (UNM).
TWST: How were the stocks treated by the market in 2000? For some of the
insurers, it was their first year as public companies.
Ms. Giordano: Broadly speaking, the life insurance sector performed
extraordinarily well in the year 2000. After underperforming the S&P in
January and February of 2000, the life insurance group rallied back,
achieving a 43% appreciation versus a 10% decline in the S&P 500. The
best performers were the recent demutualizations, John Hancock and
MetLife, and also companies that were acquired or announced that they
were going to be acquired, for instance, AXA Financial (AXF) and Liberty
Financial (L). In addition, you also had some pretty good appreciation
in AFLAC and Nationwide, which did not perform well in 1999 even though
fundamentals were solid, but rebounded in 2000.
Tickers included in this excerpt: AFL, ALRE, AXF, HLI, JHF, MET, NFS
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