Buy Life Insurers - 07/29/11

"MetLife's U.S. annuity sales of $7.3 billion, up 48% over the second quarter of 2010, driven by strong demand for variable annuities"

-- Source: MetLife earnings release after the close (http://finance.yahoo.com/news/MetLife-Announces-Second-bw-2133715247.html?x=0&.v=1)

Beyond Netflix (NFLX), Amazon (AMZN), Apple (AAPL) and some other selected companies, there are few growth stories in a world of slowing growth.

And the lesson from the performance of the shares of the anointed (Apple et al) is that market participants will pay up for strong relative growth.

It remains my view that the sale of traditional guaranteed financial products sold by life insurance companies are in the process of a growth renaissance.

Equally important (as seen in the chart below), is that the life insurance sector can bought on the cheap.

Based on MetLife's (MET) strong annuity sales (see quote above from the company's earnings release), we appear to be entering a period in which the sales of traditional life products explode in volume as the consumer continues to shy away from the U.S. stock market after the investment shock of 2008-2009.

The rising demand for guaranteed products compares to the reduced propensity to invest in domestic equity fund. This trend shouldn't be surprising and should continue in the face of stagnating wages, elevated unemployment, the investment (and economic) shock of 2008-2009, the investment shock of the last decade, the 34% drop in home prices (consumers' most important asset) and a total lack of confidence in the politicians that control our destiny (in terms of policy).

Here is a recent Kass Katch on life insurers.

And here is the ongoing MetLife conference call.

Position: Long LNC, PRU and MET