Friday, August 15, 2008

Monoline vehicle insurer profits to turn up

I expect that monoline auto insurers profits will turn up over the next year or two, as two significant factors in accidents come into play:
  1. The amount of driving done - the media is reporting that as gasoline prices have risen, the American consumer is driving less than last year - about 5% less.

  2. Various anecdotal reports are that drivers becoming aware that speed is a factor in gas mileage and are slowing down.

These two factors together may well provide for a significant drop to the bottom line over the year or two, as accidents fall due to less driving, and driving at lower speeds.

It may further very well be that as all staples and non-discretionary inflationary costs hit home more, your typical "drinking driver" won't be able to afford to drink as often, thereby dramatically lowering accident rates for those insurers specializing in the high-risk driver category.

Something to consider if you invest in insurance companies.


The Confused Capitalist


David said...

Good Post.

Glad you mentioned that it will be monoline insurers that may benefit. The typical P&C insurer is suffering a lot these days due to storm activity through the US.

Ruben said...

Interesting analysis of vehicle insurance companies. I wonder if there is a way to know for sure though.

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alicia said...

Great Blog!

This is my first time coming across it but I am looking forward to reading more.

All the best!

Wall Street Survivor