XL Group Upgraded to Buy

Zacks

On Jun 28, 2013, Zacks Investment Research upgraded XL Group plc (XL) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).

Why the Upgrade?

XL Group has been witnessing rising earnings estimates on the back of strong first-quarter 2013 results, which included a 38.81% positive earnings surprise. Moreover, this insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 56.46%. The year-to-date return for the stock came in at 21.5%, comfortably above the S&P 500’s return of 13.1%.

Since it reported the first-quarter 2013 earnings results on May 2, 2013, the company has undertaken several initiatives to expand its product portfolio. In the month of May, XL Group enhanced its marine coverage services with the introduction of ShipShape Plus, enhancing its existing product– ShipShape, which caters to the needs of luxury yacht owners. Within a week of the launch, XL Group introduced the Motor Truck Cargo Coverage Solutions to enhance its inland marine business, under its Property and Casualty segment.

In the same month, it launched five products namely Comprehensive Crime Insurance, Civil Liability Insurance, Directors & Officers Liability Insurance, Private Equity/Venture Capital Liability Insurance, and Investment Management Insurance, for reducing risks confronted by financial institutions.  

In Jun 2013, XL Group formed a new Reinsurance Global Emerging Markets Unit within its reinsurance operations to consolidate the operations of the company so that it can competently cater to its clients.

Additionally, to acquire more customers, the environmental business of the company introduced a pollution protection for fixed base operators. Last week, XL Group introduced a new insurance product – the Wage & Hour Liability insurance to specifically cater to the requirements of Fortune 500 companies and other major companies, which face employee compensation and classification disputes. We expect these endeavors to be helpful for the company in expanding its client base and generating more revenues, thereby bolstering earnings.

XL Group also continues to enhance shareholders’ value through dividend payment as well as share repurchases. This reflects a strong balance sheet and healthy free cash flow on part of the company.

The Zacks Consensus Estimate for 2013 increased 11.5% to $2.92 per share as 10 of 13 estimates were revised higher over the last 60 days. The estimate also represents a year-over-year increase of 47.4%. The Zacks Consensus Estimate for 2014 increased 3.8% to $2.97 per share, representing a year-over-year increase of 1.8% as 8 of 13 estimates were revised higher over the last 60 days.

Other Stocks to Consider

Among other stocks in the industry, American Safety Insurance Holdings Limited (ASI), Markel Corporation (MKL) and State Auto Financial Corporation (STFC) carry a favorable Zacks Rank #1 (Strong Buy) and appear impressive.


 

Read the Full Research Report on XL

Read the Full Research Report on ASI

Read the Full Research Report on MKL

Read the Full Research Report on STFC

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