We have retained our Outperform recommendation on
XL Group plc
). The conservative underwriting practices of the company and
repositioned P&C portfolio is expected to push up XL Group's
financials in the upcoming period. The global insurance and
reinsurance provider currently carries a Zacks Rank #1 (Strong
Why the Reiteration?
Over the last 30 days, one out of 13 estimates moved north
pushing the Zacks Consensus Estimate for 2013 by 1.7% to $2.92
per share. This also translates into a year-over-year improvement
of 47.4%. Over the last 60 days 10 out of 13 estimates moved up
pushing the Zacks Consensus Estimate by 11.9%.
With a strong international exposure and a diversified product
offering suite, XL Group positions itself to write higher
premiums. It focuses on those lines of businesses within its
insurance and reinsurance operations that generate higher
returns. Moreover to reach out to more number of clients the
company has been undertaking a number of initiatives which
include strategic alliances and expansion of its geographic
Additionally, the formation of a new unit within its
reinsurance business is expected to consolidate its operations,
thereby enhancing customer service. The company also launched the
Motor Truck Cargo Coverage Solutions recently, which targets the
mid-to-large sized trucking business in North America. This is
expected to strengthen its inland marine business under the
Property and Casualty segment thereby bolstering top line growth.
XL Group consistently rewards its shareholders through share
buybacks and dividend payouts. The Board in Feb 2013 authorized
an $850 million worth of share buyback replacing the $250 million
worth of shares remaining under the previous authorization. As of
Mar 31, 2013, the company is left with $725 million under its
authorization. XL Group also increased its quarterly dividend by
27% to 14 cents per share in Feb 2013. The company also scores
strongly with the rating agencies.
However, fluctuating cash position of the company and exposure to
losses resulting from natural and man-made disasters and other
catastrophic events remain a matter of concern for XL Group.
Other Stocks to Consider
Among others from the industry,
American Safety Insurance Holdings Limited
Montpelier Re Holdings Limited
Platinum Underwriters Holdings Limited
) carry Zacks Rank #1 (Strong Buy) and are worth considering.
AMER SAFETY INS (ASI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
PLATINUM UNDRWT (PTP): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
To read this article on Zacks.com click here.