67 WALL STREET, New York - June 10, 2013 - The Wall Street Transcript has just published its Insurance Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Low Profitability and Low Interest Rates - Commercial Line Brokers and Underwriters - Consolidation Trends - Emerging Market Expansion - Analysis Of Personal, Commercial & Reinsurance Subsectors
Companies include: Stewart Information Services C (STC), Fidelity National Financial, I (FNF), First American Corp. (FAF), Brown & Brown Inc. (BRO), Arthur J Gallagher & Co. (AJG), Willis Group Holdings Ltd. (WSH) and many more.
In the following excerpt from the Insurance Report, an expert analyst discusses the outlook for the sector for investors:
TWST: You've got several stocks with "equal weight" ratings. Are there any common themes we can derive from that group of "equal weight" ratings, and what would be catalysts for you to consider upgrades on some of those?
Mr. Huff: Let me take the title insurers first, because I think that's a pretty common theme and pretty easy to explain. So as we mentioned, we're kind of waiting out this refi decline when it happens.
We think the stocks are range-bound until we get through that, and then once we're through that near-medium-term issue, we think the stocks likely become more interesting, especially if they are trading down at all from where they are. The closer they get to book value the more interesting we think they are, so once we get through there, we think the stocks get more interesting.
As I mentioned, we think Stewart is relatively well-positioned given its more favorable mix, and we also think that Stewart could be interesting sooner than the other two companies, simply because it has some company-specific things that it's doing. Its operational execution prior to a new CEO coming on about a year and a half ago was subpar for the industry, and as a result they tend to have a lower multiple both on book value and on EPS.
We think they are doing good work on improving their operations, have done so and will continue to do so. So we think there are some company-specific things that Stewart could drive to provide upside to expectations in 2014, but we're still in wait-and-see mode to see how those things pan out.
In terms of more specific answers on FAF and FNF, again, once we get through the range-bound nature of what we think will happen to the stocks during this refi transition, we think both FAF and FNF are very well-run companies. FNF in particular is well-known as being the margin leader; title pretax margins is the main metric that folks use, and they've been the historic leader...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
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