Spectrism
18th March 2011, 10:41 AM
Just curious if anyone is looking at ways to play the (rigged) game with events unfolding in Japan or elsewhere.
One thing I am watching is insurance companies tied in with Japan's losses.
Here is one link I found interesting.
http://seekingalpha.com/article/258933-4-u-s-insurance-stocks-with-risky-japan-exposure
4 U.S. Insurance Stocks With Risky Japan Exposure 1 comment | by: Investment Underground March 18, 2011 | about: AFL, HIG, MET, PRU
In our continued study on how the tragedy in Japan affects today's markets, let's follow up on our piece about four insurance companies insulated from Japan with an investigation of companies with heavy Japan exposure:
1) Aflac (AFL) donated 100 million yen ($1.26 million) to the International Red Cross on March 11. This is because the company has strong roots in Japan with 82 sales offices in Japan. According to the company, only 2 of these offices have been negatively impacted. Both of these offices are in Sendai. Moreover, less than 5% of Aflac Japan's revenues come from the hardest-hit prefectures: Iwate, Miyagi, and Fukushima.
Aflac Chairman and CEO, Daniel P. Amos said, "As we look to the remainder of 2011, we expect Aflac Japan sales will only be minimally impacted by these events. Our earnings guidance for the year remains unchanged: we will likely be at the low end of the 8% to 12% range for operating earnings per diluted share growth in 2011, excluding the impact of currency." AFL shares are down 9% since Friday, March 11. We'll have to wait and see the effect of policy payouts on Aflac Japan.
Hartford (HIG) was lucky to wind down its variable annuity sales business in Japan in 2010. However, it remains exposed to Japanese 3Win foreign currency swaps, Japanese fixed annuity hedging instruments, and Japanese variable annuity hedging instruments. Descriptions are below with net derivative amounts as of December 31, 2010.
Japan 3Win foreign currency swaps ($2.28 billion)
Prior to the second quarter of 2009, HIG offered certain variable annuity products with a guaranteed minimum income benefit ("GMIB") rider through a wholly-owned Japanese subsidiary. The GMIB rider is reinsured to a wholly-owned U.S. subsidiary, which invests in U.S. dollar denominated assets to support the liability. The U.S. subsidiary entered into pay U.S. dollar, receive yen forward contracts to hedge the currency and interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.
Japanese fixed annuity hedging instruments ($2.1 billion)
Prior to the second quarter of 2009, HIG offered a yen denominated fixed annuity product through a wholly-owned Japanese subsidiary and reinsured to a wholly-owned U.S. subsidiary. The U.S. subsidiary invests in U.S. dollar denominated securities to support the yen denominated fixed liability payments and entered into currency rate swaps to hedge the foreign currency exchange rate and yen interest rate exposures that exist as a result of U.S. dollar assets backing the yen denominated liability.
Japanese variable annuity hedging instruments ($1.7 billion)
HIG enters into foreign currency forward and option contracts to hedge the foreign currency risk associated with certain Japanese variable annuity liabilities reinsured from a wholly-owned Japanese subsidiary. Foreign currency risk may arise for some segments of the business where assets backing the liabilities are denominated in U.S. dollars while the liabilities are denominated in yen. Foreign currency risk may also arise when certain variable annuity policyholder accounts are invested in various currencies while the related guaranteed minimum death benefit and GMIB guarantees are effectively yen-denominated.
HIG donated $100,000 to the American Red Cross on March 16. HIG shares are down 9.7% since March 11. The company generated $22.8 billion in revenues and $1.68 billion in profits in 2010, which was a decrease of 9.38% in revenues and turnaround from negative territory in profits.
MetLife (MET) paid $16.4 billion to acquire American Life Insurance Company ("ALICO") from AIG (AIG). This acquisition was meant to solidify MetLife's presence in Japan. In fact, about 12% of ALICO's assets are attributed to its Japan operations. As a result, MetLife's Japan operation is now among the largest foreign life insurers in Japan, and ranks sixth in the Japanese life insurance industry measured by total premiums, according to the Statistics of Life Insurance in Japan 2009. The company acknowledges that "deterioration in Japan's economic recovery could have an adverse effect on [its] results of operations and financial condition."
As of December 31, 2010, MetLife also owned $15.5 billion of Japanese government and fixed maturity securities. Additionally, 10% of the company's real estate investments are in Japan.
MET shares are down 7.4% since March 11. The company made $52.7 billion in revenues and $2.79 billion in profits in 2010, which was an increase of 28.4% in revenues, and a 180-degree-change in profits from -$2.2 billion in 2009.
Prudential (PRU) paid $4.8 billion to acquire several Japanese subsidiaries from AIG (AIG) on February 1, 2011. The acquired businesses distribute individual life insurance, group life insurance, group annuities, medical insurance, and fixed annuities primarily through captive agents, independent agents, and banks. As of December 31, 2010, these businesses had approximately $174 billion face amount of in force individual insurance and approximately 7,490 captive agents.
As of December 31, 2010, $2.5 billion of forward currency contracts were related to the company's Japanese insurance operations. The company also held dual currency investments in the form of fixed maturities and loans. This came out to be $3.2 billion.
$80.2 billion or 38% of the company's Financial Services Businesses' general account investments relate to Japanese insurance operations. Revenues from the company's Japanese "Life Planner" operations increased $823 million, from $6,443 million in 2009 to $7,266 million in 2010, including a net favorable impact of $312 million from currency fluctuations. In comparison, the company made $38.4 billion in revenues in 2010.
On March 15, the company contributed 500 million yen ($6.1 million) to aid relief efforts. PRU shares are down 7.5% since March 11.
If you're looking for some other names to consider in the wake of the tragedy, we think these six alternative energy stocks will do well due to the fallout on nuclear industry going forward. As always, use the names as starting point for your own research and do your own due diligence.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
One thing I am watching is insurance companies tied in with Japan's losses.
Here is one link I found interesting.
http://seekingalpha.com/article/258933-4-u-s-insurance-stocks-with-risky-japan-exposure
4 U.S. Insurance Stocks With Risky Japan Exposure 1 comment | by: Investment Underground March 18, 2011 | about: AFL, HIG, MET, PRU
In our continued study on how the tragedy in Japan affects today's markets, let's follow up on our piece about four insurance companies insulated from Japan with an investigation of companies with heavy Japan exposure:
1) Aflac (AFL) donated 100 million yen ($1.26 million) to the International Red Cross on March 11. This is because the company has strong roots in Japan with 82 sales offices in Japan. According to the company, only 2 of these offices have been negatively impacted. Both of these offices are in Sendai. Moreover, less than 5% of Aflac Japan's revenues come from the hardest-hit prefectures: Iwate, Miyagi, and Fukushima.
Aflac Chairman and CEO, Daniel P. Amos said, "As we look to the remainder of 2011, we expect Aflac Japan sales will only be minimally impacted by these events. Our earnings guidance for the year remains unchanged: we will likely be at the low end of the 8% to 12% range for operating earnings per diluted share growth in 2011, excluding the impact of currency." AFL shares are down 9% since Friday, March 11. We'll have to wait and see the effect of policy payouts on Aflac Japan.
Hartford (HIG) was lucky to wind down its variable annuity sales business in Japan in 2010. However, it remains exposed to Japanese 3Win foreign currency swaps, Japanese fixed annuity hedging instruments, and Japanese variable annuity hedging instruments. Descriptions are below with net derivative amounts as of December 31, 2010.
Japan 3Win foreign currency swaps ($2.28 billion)
Prior to the second quarter of 2009, HIG offered certain variable annuity products with a guaranteed minimum income benefit ("GMIB") rider through a wholly-owned Japanese subsidiary. The GMIB rider is reinsured to a wholly-owned U.S. subsidiary, which invests in U.S. dollar denominated assets to support the liability. The U.S. subsidiary entered into pay U.S. dollar, receive yen forward contracts to hedge the currency and interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.
Japanese fixed annuity hedging instruments ($2.1 billion)
Prior to the second quarter of 2009, HIG offered a yen denominated fixed annuity product through a wholly-owned Japanese subsidiary and reinsured to a wholly-owned U.S. subsidiary. The U.S. subsidiary invests in U.S. dollar denominated securities to support the yen denominated fixed liability payments and entered into currency rate swaps to hedge the foreign currency exchange rate and yen interest rate exposures that exist as a result of U.S. dollar assets backing the yen denominated liability.
Japanese variable annuity hedging instruments ($1.7 billion)
HIG enters into foreign currency forward and option contracts to hedge the foreign currency risk associated with certain Japanese variable annuity liabilities reinsured from a wholly-owned Japanese subsidiary. Foreign currency risk may arise for some segments of the business where assets backing the liabilities are denominated in U.S. dollars while the liabilities are denominated in yen. Foreign currency risk may also arise when certain variable annuity policyholder accounts are invested in various currencies while the related guaranteed minimum death benefit and GMIB guarantees are effectively yen-denominated.
HIG donated $100,000 to the American Red Cross on March 16. HIG shares are down 9.7% since March 11. The company generated $22.8 billion in revenues and $1.68 billion in profits in 2010, which was a decrease of 9.38% in revenues and turnaround from negative territory in profits.
MetLife (MET) paid $16.4 billion to acquire American Life Insurance Company ("ALICO") from AIG (AIG). This acquisition was meant to solidify MetLife's presence in Japan. In fact, about 12% of ALICO's assets are attributed to its Japan operations. As a result, MetLife's Japan operation is now among the largest foreign life insurers in Japan, and ranks sixth in the Japanese life insurance industry measured by total premiums, according to the Statistics of Life Insurance in Japan 2009. The company acknowledges that "deterioration in Japan's economic recovery could have an adverse effect on [its] results of operations and financial condition."
As of December 31, 2010, MetLife also owned $15.5 billion of Japanese government and fixed maturity securities. Additionally, 10% of the company's real estate investments are in Japan.
MET shares are down 7.4% since March 11. The company made $52.7 billion in revenues and $2.79 billion in profits in 2010, which was an increase of 28.4% in revenues, and a 180-degree-change in profits from -$2.2 billion in 2009.
Prudential (PRU) paid $4.8 billion to acquire several Japanese subsidiaries from AIG (AIG) on February 1, 2011. The acquired businesses distribute individual life insurance, group life insurance, group annuities, medical insurance, and fixed annuities primarily through captive agents, independent agents, and banks. As of December 31, 2010, these businesses had approximately $174 billion face amount of in force individual insurance and approximately 7,490 captive agents.
As of December 31, 2010, $2.5 billion of forward currency contracts were related to the company's Japanese insurance operations. The company also held dual currency investments in the form of fixed maturities and loans. This came out to be $3.2 billion.
$80.2 billion or 38% of the company's Financial Services Businesses' general account investments relate to Japanese insurance operations. Revenues from the company's Japanese "Life Planner" operations increased $823 million, from $6,443 million in 2009 to $7,266 million in 2010, including a net favorable impact of $312 million from currency fluctuations. In comparison, the company made $38.4 billion in revenues in 2010.
On March 15, the company contributed 500 million yen ($6.1 million) to aid relief efforts. PRU shares are down 7.5% since March 11.
If you're looking for some other names to consider in the wake of the tragedy, we think these six alternative energy stocks will do well due to the fallout on nuclear industry going forward. As always, use the names as starting point for your own research and do your own due diligence.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.