Investment exposure fears drive down insurance sector stocks

The period ending 22nd January, represented another horrific two weeks for insurance stocks with Swiss Re, most notably, falling by 36.1% over the two week period. To be fair, UK insurance group, Aviva, (down by 32.7%) and Bermuda based XL Capital (down by 30.5%) were not that far behind. Confidence in the capital markets is at an all time low right now, with virtually all equities losing ground. But the sharp deterioration in the share prices of these three insurers was a bit more specifically grounded in investors’ heightened fears about either the state of these companies’ investment portfolios or their continuing exposures to financial guarantee operations many of which are now in run-off.