Morning Report Tuesday 15 April 2014
As QBE looks to sell its troubled US assets, we look at the insurance sector on the whole for opportunities?
The insurance sector has clearly been a large underperformer since the major ASX200 top of 6,852 back in November 2007. We are still 21.8% below this, as opposed to the major indices around the world making new all-time highs in 2014. The distance below the 2007 highs for the four main insurers is a clear illustration of why investors should be prepared to have fluid portfolios and not just hold and hope.
AMP -54%, Insurance Australia (IAG) -18%, QBE -66% & Suncorp (SUN) -42.6% - the below four charts illustrate this poor performance all too well.
As most investors know, during this dismal insurance sector performance, the banks have made great advances with ANZ and Westpac trading at new all-time highs last Thursday. I believe the time is approaching to lighten bank holdings as interest rates are set to rise and plain yield plays will be less attractive. Insurance sector earnings should improve from their bond portfolios as rates rise. See our Market Matters video topic - Banks.
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