Don't Paint All Insurers With the Subprime Brush

There are insurers, and then there are insurers. Ambac (ABK - commentary - Cramer's Take), PMI (PMI - commentary - Cramer's Take), MGIC (MTG - commentary - Cramer's Take) and MBIA (MBI - commentary - Cramer's Take) are FAUX insurers. They offer insurance on financial instruments involving mortgages that could be worthless! I would want my money back if I were a muni issuer!

But then are real insurers, the property casualty insurers, and that's a real business. They get hit, they pay, they raise price. Fabulous.

Yet the market lumps them all together as if they are all terrible.

Wrong!

You want evidence? Take a look at Safeco (SAF - commentary - Cramer's Take). Yes, boring old Safeco, like Safeco Field of the Mariners -- Safeco. My insurer -- at least at one point -- Safeco.

It's up huge on a magnificent takeover bid from Liberty Mutual! .

And did anyone "have" it? Hard to tell, given that 16 analysts covered it and there were four sells and 12 holds. They are as negative on these companies as they are on ABK, MBI and the rest of them, although these are different analysts in most cases. Still, insurers are tainted, no matter what.

I think this is the beginning of the long-awaited consolidation in the "good" or "real" insurers. Liberty Mutual's a smart company. Others will explore the same concept, because these companies didn't shoot themselves in the foot, arm, chest and head with subprime. They were too conservative.

I like Chubb (CB - commentary - Cramer's Take), just a miracle company, and the company I insure with cause its reputation is so great and deserved. $38 book, and it is at $51! Look at it like this -- Safeco had a $38 book, too, and boom, you got $66!

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.