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Four analysts and top management from fifteen sector firms examine the Property & Casualty/Insurance Brokers sector in this special 72-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info412.htm

TWST: Ken, what approach do you take to the group, and which sectors do you focus on?

Mr. Zuckerberg: I focus on a variety of subsectors within the non-life group — the commercial national agency writers, personal line insurers, brokers, some of the Bermudan companies (which we’re in the process of finishing our work on) and the regional insurers. So we cover a broad range of non-life companies. And like some of my other colleagues, I start by taking a bottom-up look at the company itself and then a top-down look at the industry and that company’s position within the industry. Financial statement analysis is really critical. We spend a lot of time looking at GAAP, or accrual-based accounting, as well as statutory accounting. It’s important to look at both “sets of books” when trying to understand a company’s underlying financial strength as well as its ability and its flexibility to grow earnings and book value for common shareholders. Maybe what I can add that others haven’t said already is, on the company analysis side, I think it’s very important to look at qualitative factors, such as the holding company structure, the company’s franchise value, the strength of the management team, and whether or not the company has a distribution or product advantage. On the quantitative side there are a tremendous number of basic factors that we pay attention to. Loss reserve adequacy is critical, in our view, in determining whether a company is healthy.

TWST: Ken, what are your two top favorites today?

Mr. Zuckerberg: My two top picks would be AIG (NYSE:AIG) and Chubb (NYSE:CB), for different reasons. Moving on to Chubb, we became bullish after being a seven-year bear on the company. We always thought Chubb was a great insurance company, but that it hadn’t always been a great corporation, and our thought process was pretty straight-forward. Earnings per share and book value per share growth on Chubb were not terrific. In fact, if memory serves, both were under 7% between 1995 and 2000. Paying a large premium to book value for that kind of performance didn’t make it an attractive stock. The reason for our change in thinking was multifaceted. First, it’s our sense that Chubb’s balance sheet is strong, with limited reserve risk. Second, Chubb’s reinsurance business, started by John Berger a couple of years ago, is also an interesting new area of growth for the company. Third, Chubb is both an emerging growth and a change story. Fourth, Chubb hired Weston Hicks from Wall Street about six months ago, and we think Weston can help Chubb basically retool its capital structure to improve returns going forward. We don’t think it’s a 2001 event, nor do we think it’s an 2002 event — but we do think it can happen by 2003. With Weston’s strong financial background, we think Chubb will be able to manage its way through the rating agencies and take on more debt in order to opportunistically buy back stock. We think the key to the Chubb story is really seeing them develop a mid-teens ROE. It’s not guaranteed that they’ll get there, but we think given that their balance sheet is strong and they’re a prime beneficiary of rising commercial rates, this is an interesting play on the cycle. And again, it’s a company that has traded down significantly from its 52-week high. So we feel pretty encouraged that the risk/reward at today’s prices is pretty attractive.

This special issue includes:

1) Property & Casualty/Insurance Brokers - In an in-depth (13,300 words) Analyst Roundtable, Jay Cohen, First Vice President at Merrill Lynch, Craig Elkind, Vice President at Credit Suisse Asset Management, Clifford Gallant, Vice President at Keefe, Bruyette & Woods, Inc. and Kenneth Zuckerberg, Vice President at Dresdner Kleinwort Wasserstein, examine the outlook for the sector including, condition of Lloyd's, cyclicality changes and share specific stock recommendations.

2) CEO interviews (average 2,500 words). Top management of fifteen sector firms examine the outlook for their firm and the sector.