Total Return Indexes Q&A
How do A.M. Best's Total Return Stock Indexes differ from the regular A.M. Best Stock Indexes?
The regular A.M. Best Stock Indexes are based solely on the prices of component stocks, weighted for the free float market capitalization of those stocks. A.M. Best's Total Return Stock Indexes are constructed in the same manner, except prices of component stocks are adjusted for dividends paid, which are treated as being reinvested in the stock. As a result, the change in a total return index reflects not only the return from the change in stock prices, but also from dividend payments and reinvestment of same.
How are the Total Return Indexes published or accessed differently than the standard indexes?
The ticker symbol for a given total return index is the same as for the underlying standard index, but with a "T" appended at the end. For example, A.M. Best's Global Reinsurance Index with ticker AMBGR has the ticker symbol AMBGRT on a total return basis.
Since a total return index will tend to move in lockstep with the underlying standard index during the day, only the total return index's closing level is published daily, and through most stock quotation services. The regular indexes are available from a live feed, with a 20 minute delay versus the markets and through most stock quotation services.
| A.M. Best's Stock Index | Standard Ticker |
Total Return Ticker |
|---|---|---|
| A.M. Best's Global Insurance Composite Index | AMBG | AMBGT |
| A.M. Best's Global Reinsurance Index | AMBGR | AMBGRT |
| A.M. Best's Global Multi-Line Insurance Index | AMBGML | AMBGMLT |
| A.M. Best's Global Non-Life Insurance Index | AMBGNL | AMBGNLT |
| A.M. Best's Global Life Insurance Index | AMBGL | AMBGLT |
| A.M. Best's Global Insurance Brokers Index | AMBGB | AMBGBT |
| A.M. Best's European Insurance Composite Index | AMBEUR | AMBEURT |
| A.M. Best's Asian/Pacific Insurance Composite Index | AMBAP | AMBAPT |
| A.M. Best's U.S. Insurance Composite Index | AMBUS | AMBUST |
| A.M. Best's U.S. Multi-Line Insurance Index | AMBUML | AMBUMLT |
| A.M. Best's U.S. Property/Casualty Insurance Index | AMBUPC | AMBUPCT |
| A.M. Best's U.S. Life & Health/HMO Insurance Index | AMBULH | AMBULHT |
| A.M. Best's U.S. Life Insurance Index | AMBUL | AMBULT |
| A.M. Best's U.S. Health/HMO Insurance Index | AMBUH | AMBUHT |
What are the advantages of a Total Return Index for an investor?
An investor using a total return index sees a more accurate indication of an index's actual investment return: price change plus reinvested dividends. For example, since Dec. 31, 2004, A.M. Best's Global Insurance Composite Index (AMBG) has decreased 31.4% based on price alone (as of June 1, 2009), but on a total return basis, the AMBGT has decreased only 24.1%.
What are the advantages of a Total Return Index for insurance companies and market analysts?
Insurance companies often look to benchmark their own stock performance against a peer group. Market analysts do the same. Those looking to do such an assessment now are able to view actual, or total, return, including both the change in a company's stock price as well as return in reinvested dividends, against a peer grouping on a similar basis. This is the same view that usually has greatest meaning to a company's stockholders.
