I invested in MFC and GWO roughly 2.5 years ago amongst a fairly diverse portfolio. I originally purchased both as a dividend play with potential for modest appreciation, but they have far exceeded my market value appreciation expectations over this time frame. I since purchased a smaller position in Sun Life roughly 3 months ago. For the first two, I likely need to trim for rebalancing / concentration sake.
My question(s) is as follows (and please deduct how many points as necessary):
- At a high level, what is your outlook for the Insurance space over the next 1-3 years and what indicators do you look at when making this assessment?
- Amongst the three companies listed, how would you rank them in terms of expected growth over the next 3 years?
Thanks and really appreciate the advice from 5i.
Erick
As a whole, the insurance industry is quite resilient, and can withstand difficult economic times as well as prosper in the strong economic times. The insurance ETF (KIE) is trading at 12.2X forward earnings, slightly above its 10-year average of 11.8X. Although, it has reached significant premiums of 13X-14X forward P/E during strong economic periods. We like insurance for its consistency, and reliability, and many insurance names benefit from rates falling as their bond portfolios perform well, and equities typically benefit from this type of environment.
Historically, we have liked SLF's strong track record of execution, but recently MFC has been demonstrating a turnaround in its operational results. Largely, we would rank as follows (from highest to lowest): SLF, MFC, GWO.