For Immediate Release
Chicago, IL – December 18, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Allstate Corporation (ALL), The Travelers Companies Inc. (TRV), Progressive Corp. (PGR), XL Group plc (XL) and Tower Group Inc. (TWGP).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday’s Analyst Blog:
Sandy Won't Help Insurance Pricing
Since most of the property and casualty insurers, adversely affected by the Hurricane Sandy, have provided their initial loss estimates for the fourth quarter of 2012, we can fairly classify the loss caused by the storm as an earnings event rather than a capital event.
By earnings event we mean that the losses due to Sandy will hit insurers’ fourth quarter earnings, but will not significantly erode their capital position. Insuers such as Allstate Corporation (ALL), The Travelers Companies Inc. (TRV), Progressive Corp. (PGR), XL Group plc (XL) and Tower Group Inc. (TWGP), who had high exposure to the Sandy-affected areas, suffered losses to the extent of 0.9%–2.0% of their shareholders’ equity. In total, loss from Sandy is pegged at approximately 3.9% of the available industry surplus.
Despite being known as the third most expensive hurricane in the U.S. history in terms of insured losses, with up to $25 billion in claims paid, ranking only behind 2005’s Hurricane Katrina ($48.7 billion) and 1992’s Hurricane Andrew ($25.6 billion), Sandy has failed to qualify as “catalyst” for improving insurance pricing. However, it can impact the insurance and reinsurance prices in some of the affected areas – Northeast/MidAtlantic.
While the record cat loss in 2011 caused industry underwriting loss of $36.5 billion and induced pricing to improve in many non-life insurance segments, a broad-based hardening of rates was nowhere to be seen. Further, lack of substantial losses in 2012 has narrowed underwriting losses to $7 billion in the first half of 2012 from an underwriting loss of $24.1 billion a year ago. The combined ratio – a key measure of losses and other underwriting expenses per dollar of premium – improved to 102.2% in the first-half 2012 from 110.5% in 2011.
Owing to surplus capital, carriers have been increasing share repurchases and dividend payments. Going forward, the continuing low interest rate through 2014, which will keep investment income under pressure along with drying up of excess reserve release, will drain the capital position of the insurers, forcing them to recheck their pricing policy.
Currently, the prices have stopped softening and these have yet to witness a change across the regions as well as business lines. Moreover, the magnitude of price rise remains small. A thorough study of the insurance market points toward a typically mature soft market cycle, but this cycle is likely to take more time to reverse fully.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: https://twitter.com/zacksresearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com