AFLAC Incorporated (AFL), Prudential Financial Inc (PRU): Will the Insurance Giants Survive the Japanese Tsunami?

Valuations

The impact of the unfavorable events is visible from the year to date performances of the insurers. AFLAC Incorporated (NYSE:AFL) is down 4% since the beginning of the year and is trading at a 47% premium to its book value. Prudential Financial Inc (NYSE:PRU) is up 10% YTD and is trading at a 30% discount to its book value. Compared to this, American International Group Inc (NYSE:AIG) and Genworth are trading at 40% and 70% discounts to their respective book values, after they have appreciated 16% and 38% respectively since the beginning of the year.

Conclusion

While some insurance giants’ (including AFLAC Incorporated (NYSE:AFL) and Prudential Financial Inc (NYSE:PRU)) first quarters were negatively impacted due to the macroeconomic environment in Japan, others like Genworth Financial Inc (NYSE:GNW) and American International Group Inc (NYSE:AIG) enjoyed an environment marked with strong equity market performance and solid private equity returns. Further, since Genworth Financial Inc (NYSE:GNW) and American International Group are also trading at significant/attractive discounts to their book values, I recommend you buy them.

Adnan Khan has no position in any stocks mentioned. The Motley Fool recommends Aflac and American International Group. The Motley Fool owns shares of American International Group and has the following options: Long Jan 2014 $25 Calls on American International Group.