When turnaround trends take place in industries that have been considered boring or unappealing for extended periods of time, such events can be rather explosive. A good example of this is the PowerShares KBW Insurance Portfoliio ETF (NYSEARCA:KBWI), an ETF that holds only insurance-company stocks. The inception date is Nov. 1, 2011 and the posted one-year return is approximately 28.9%.
The release of the PowerShares KBW Insurance Portfolio appears to be timely. The underlying index does have a five-year track record of average returns. In fact this index has outperformed the S&P Insurance index, which supports the creator’s ability to design and back-test a portfolio. Below are an allocation chart and a price chart of the PowerShares KBW Insurance Portfolio. I am seeing a trend reversal in an industry that tends to stay on track, after the track is formed.
The largest position held in the PowerShares KBW Insurance Portfolio is The Travelers Companies, Inc. (NYSE:TRV). Travelers was once part of Citigroup Inc (NYSE:C)‘s family of companies that were the foundation of the mega-financial supermarket concept. The Travelers Companies, Inc. (NYSE:TRV) was one of the early spin-offs from this family.
As of May 2, there is a 7.7% weighting of the fund in The Travelers Companies, Inc. (NYSE:TRV), and the price chart below shows a nice uptrend. The first quarter of 2013 is filled with positive news for this company. Net earnings per share are up by 11% from the same quarter last year, underwriting margins in all lines of insurance are improving, and rate gains continue to exceed claims losses. All in all I think this shows that The Travelers Companies, Inc. (NYSE:TRV)’ management is guiding this once-stodgy property and casualty insurer to new heights.
The second largest position (7.3%) of the PowerShares KBW Insurance Portfolio goes to another property and casualty insurer, The Chubb Corporation (NYSE:CB). Chubb is reporting similar stellar results. First-quarter 2013 earnings per share were up 36% from the same period last year. The Chubb Corporation (NYSE:CB) has repurchased approximately 3.9 million shares and John D. Finnegan, chairman, president, and CEO, states that The Chubb Corporation (NYSE:CB) is off to great start in 2013. Just look at the price chart below to see that this is another terrific story.
The number three spot goes to Metlife Inc (NYSE:MET). Metlife Inc (NYSE:MET) is an insurer that underwrites a wider range of lines than the two previously mentioned companies. The holdings in the PowerShares KBW Insurance Portfolio are approximately 7.2%, and the company’s developments are good, yet do not show the same bang as the other top holdings do.