We are reiterating our 'Neutral' recommendation on the shares
Reinsurance Group of America Inc.
) following the fourth quarter earnings release. Diversified
operations and a significant position in the U.S. will help it to
perform favorably, over the long term.
Reinsurance Group holds a significant position in the U.S. and
Canada. It has fully geared itself to maintain its competitive
position in the in North American reinsurance market by growing
Facultative Reinsurance, Automatic Reinsurance and In Force Block
It is also focusing on its underwriting standards, prompt
response on quotes, competitive pricing as well as capacity and
flexibility to meeting customer needs, in an attempt to preserve
its position. The acquisition of ReliaStar's group life and
health reinsurance business has helped it to penetrate deeper in
the North American market.
Reinsurance Group is aggressively growing its international
operations to reap the benefits of diversification. Management is
eyeing key Asian markets, particularly India and China, which
represent long-term significant opportunities given the low
reinsurance penetration in these markets. Going forward,
management continues to see significant market opportunities in
As a result of consolidations in recent years within the life
reinsurance industry, there are fewer competitors. As a
consequence, we believe that the life reinsurance pricing
environment will remain attractive for the existing life
reinsurers, particularly for those with a significant market
presence. Reinsurance Group controls approximately 19.4% of
market share in North America and ranks second only to Swiss Re
holding 21.4% on the basis of individual life reinsurance in
force. It has strong ratings.
Some of the negatives include weak equity markets coupled with
interest rates, which are expected to remain low in 2013, and put
additional pressure on Reinsurance Group's Asset Intensive
business. Moreover, management's conservative positioning of the
investment portfolio is expected to exert pressure on yield.
Cincinnati Financial Corp.
XL Group plc
) each carrying Zacks Rank #1(Strong Buy),
) with Zacks Rank #2 (Buy), are among other property and casualty
insurers worth considering.
CINCINNATI FINL (CINF): Free Stock Analysis
REINSURANCE GRP (RGA): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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