All-Star Analysts 1993 Survey: Life Insurance
Life insurance stocks have enjoyed a nice rally, with falling interest rates getting much of the credit. Insurers typically own huge bond portfolios, and falling rates enhance the value of the bonds they hold.</br></br>"My one concern is rising rates," says First Boston analyst Charles Gates, the No. 1 stock picker in the life insurance group last year. He fears that the White House will decide the economy needs more stimulus, and that efforts to get the economy going ahead will push rates in an unpleasant direction.</br></br>Mr. Gates had a big gain last year in Conseco; he also made money in American Bankers, American General and a couple of other stocks. Today, American General heads his list of buys. The Houston-based life insurer contains a strong consumer finance company and a strong annuity company that specializes in selling to teachers, he says. It pays a better-than-average dividend and offers a high-quality balance sheet.</br></br>Mr. Gates also likes another company that sells to teachers, Horace Mann Educators in Springfield, Ill. The company, which writes car and homeowners insurance as well as life insurance, has a first-rate sales force and competitive pricing, he says.</br></br>Norman L. Rosenthal of Morgan Stanley earned the number-two slot by dint of a big gain in Torchmark. He is a bull on the industry, which he says will benefit from the aging of the baby boomers and from the new tax law. By raising tax rates, the new law makes the tax advantages of investment-oriented life insurance products more important.