For Immediate Release
Chicago, IL - February 13, 2012 - Today, Zacks Equity Research
discusses the Insurance Industry, including
Phoenix Companies, Inc.
(
PNX
) and
ProAssurance Corporation
(
PRA
).
A synopsis of today's Industry Outlook is presented below. The
full article can be read at
http://www.zacks.com/stock/news/69516/Insurance+Industry+Stock+Update+-+Feb.+2012
The impact of a series of natural disasters in 2011 and the
ongoing economic uncertainty is still quite palpable in the
performance of U.S. insurers. These impediments aside, there are
fundamental challenges that are expected to come in the way
insurers' efforts to meet growing investor expectations in the
upcoming quarters. Among the possible way outs of such
difficulties, rising rates and pricing flexibility are primary.
The overall health of the U.S. insurance industry has improved to
some extent in the recent quarters, after enduring pricing
pressures and reduced insured exposure for quite some time. The
market turmoil resulting from the Great Recession forced many
companies to take immense write-downs, but those memories are fast
becoming a thing of the past.
That said, continued soft market conditions, shrinking businesses,
a still-high unemployment rate, uncertain fiscal policy and
legislative challenges are threatening insurers' ability to rebound
to the historical growth rate. The industry continues to be
challenged by subdued premium volume growth in a perked up economy
as well as a massive healthcare restructuring.
Though there are signs of economic recovery, its sluggish pace is
expected to continue at least through the first half of 2012. Also,
structural economies of scale have pushed the industry toward
consolidation. As a result, inter-segment competition within the
industry has alleviated. Moving forward, maintaining profitability
after complying with regulatory requirements could be a painful
task.
We expect static growth from persistent soft market conditions to
result in further consolidation in the industry. Though there are
near-term opportunities for insurers, braced by some rapidly
growing sectors such as health care and technology, overall
industry conditions are expected to improve beyond the first half
of 2012, should the economy turn to growth post-recovery. Probably,
the industry would take a couple of years to overcome most industry
challenges with the help of an improved market mechanism.
OPPORTUNITIES
We remain positive on
Phoenix Companies, Inc.
(
PNX
) and
ProAssurance Corporation
(
PRA
) with a Zacks #1 Rank (short-term Strong Buy).
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PHOENIX CMPNIES (
PNX
): Free Stock Analysis Report
PROASSURANCE CP (
PRA
): Free Stock Analysis Report
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