Mr. Shanker: I can't speak for everyone's expectations, I think that they were in line with my expectations and I was expecting a lot of companies to miss. That's what generally happened and there were a few buying opportunities that we took to upgrade some names on that information. Some stocks actually rallied on what we felt were somewhat disappointing results. When we spoke about a year ago, I was bearish and I continue to be so, but there are some valuation situations that make for some interesting opportunities. In general, P&C results are going to get worse; 2007 was a great year for earnings, but the market seems to understand that the carnival is going to end one day.
TWST: What's changed that things are now missing on the downside? Is it purely
the investment side?
Mr. Shanker: No, really compared to most financials, P&C is holding up better
than most on the investment side. I cover 25 names and probably I only stay up
nights thinking about the investment portfolio on four of them. The remainder
tend to be safe from an investment perspective. There are obviously concerns
about anything in the "land of credit," but P&C companies' credit risk tends to
be much, much better than most financials. The real problems come in the
underwriting.
Tickers included in this excerpt: ACGL, ALL, PRE
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