Sandler O’Neill + Partners Top Insurance Analyst Identifies the Economic Leaders in His Stock Picks

May 15, 2019

J. Paul Newsome is a Managing Director and the Senior Insurance Analyst in the Research Department of Sandler O’Neill + Partners, L.P. Previously, he was Vice President and the senior property-casualty insurance company research analyst at A.G. Edwards and at Lehman Brothers.

Mr. Newsome has worked in or covered the insurance industry for over 20 years. Prior to Lehman Brothers, he worked at Dain in Minneapolis, and Oppenheimer and Company.

In this 1,797 word interview found only in the Wall Street Transcript, this highly trained economist identifies the key sectors for growth within the insurance industry:

“For example, workers’ compensation insurance, you are seeing prices pretty much across the board decline. It’s a very profitable business currently on an absolute basis, but it looks like the margins are being squeezed there.

You saw some very heavy losses in commercial auto, and that has resulted in perhaps an acceleration of price increases there. You’ve seen in liability insurance some small uptick in inflation and then product-specific price increases here and there, places like E&O insurance. So it is an environment where it’s not uniform in terms of what’s happening from a competitive perspective.”

There are several insurance stocks that Mr. Newsome is recommending, and he does not hesitate to indentify them:

“Our best idea for the year was Progressive (NYSE:PGR). This is a company that had just an absolute spectacular year last year, and there’s much expectation that they just will not be able to repeat that level of performance…I think that investors are underestimating the earnings potential for the company, and I think the valuation doesn’t reflect what I think they’ll earn in a year or two. So we like that company quite a bit from a stock perspective.”

Get the other top picks from Mr. Newsome by reading the entire 1,797 word interview found only in the Wall Street Transcript.