Thursday, August 14, 2008

National Western Life Insurance (NWLIA) - An Update

On July 17, I wrote on The Div-Net on a little known life insurance company called National Western Life (NWLIA). The company reported earnings last week and I wanted to update my thoughts on the stock

NWLIA reported net earnings of $18.1 million, or $5.10 per diluted Class A share.

Operating revenues were $127.4 million. This measure excludes realized investment and derivative gains or losses. The company uses derivatives to hedge its exposure to the equity market due to its product mix.

Book value per share at June 30, 2008 increased to $283.94.

Due to the current market hysteria on fixed income investments held by financial institutions, NWLIA provided more detail on its investment portfolio as follows:

The total size of the portfolio is $5.8 billion, with 96% classified as debt securities.

NWLIA holds $98.2 million in asset-backed securities comprised of $47.4 million of manufactured housing bonds and $50.8 million of sub prime home equity loans. They also own one Alt-A security with a carrying value of $4.1 million.

No holdings in collateralized bond obligations (CBOs), collateralized debt obligations (CDOs), or collateralized loan obligations (CLOs).

The stock has rallied nicely from around $200 to $249 at yesterday's close. This is getting closer to the last reported book value of $283.94.

I still own some shares of NWLIA. If you are a short term investor, you might want to think about getting out of the stock as it trades up above $250, as the stock rarely ever trades at more than one times its book value.



This article was written by The Stock Market Prognosticator. You may email questions or comments to me at info@brittaincapitalmanagement.com.

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