Insurers cash in on Al Qaeda
SOME insurance companies have been profiting from life after 9.11 - and canny investors have been buying in.
In the aftermath of the Al Qaeda attacks, insurers saw share prices fall but their premiums rise. Many shrewd investors took the opportunity to buy in. One such was New Star's Patrick Evershed, rated by analyst Citywire as top-performing fund manager over three years in the UK All-Companies sector.
He took stakes in several Lloyd's underwriters, almost to the exclusion of other financial stocks, and has done well from this strategy.
One of the stocks he bought for his Select Opportunities fund was the £78.6m valued Atrium Underwriting, in which he acquired 500,000 shares, about 1%, at 148p between May and June.
We have discovered, however, that behind the scenes Evershed added 100,000 shares to this undisclosed stake late last month at a price not far from the present 162p. This is interesting as some had started to suggest this investment theme was over, especially after a profit warning from rival Goshawk, but Evershed believes there is life in it yet.
The directors of Atrium share his faith. Recent bullish statements about strong trading conditions and earnings growth have been backed up by purchases of the company's stock.
Having returned to profit in 2002 after two fallow years, with £920,000 before tax, Atrium is expected to net £3.18m this year and £19m in 2004. So despite being at a five-year high, it is valued at only 5.84 times next year's predicted earnings.
