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There’s a divergence going on with the insurers, Cramer said on Thursday’s Stop Trading!. The old-fashioned, conservative Prudential [PRU
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] missed its earnings, sending shares down nearly 7% in mid-afternoon trading. Meanwhile, the usually “dicier” Metlife [MET
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] is surging after saying on a conference call that its subprime exposure has inflicted minimal damage.
Cramer said Prudential “may be a buy here” because its earnings miss was negligible and the stock is selling cheap to its book value. Metlife is also “really, really good here.”
Even AIG [AIG
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], which disclosed some of its bad paper a couple months ago, is “not a bad company,” the Mad Money host said. But Cramer's reluctant to recommend the stock because the declining share price has him wondering whether the insurer’s disclosure was not enough.
The problem is that it’s still hard to tell just how much exposure the large insurers have to real estate. For investors looking to avoid the sector entirely, Cramer recommended two different insurers, Chubb [CB
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] and Travelers [TRV
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].
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