As our focus this week is on Insurance, our top picks from our roundtable discussion on Life Insurance. This sector was hard hit by the financial turbulence of 2008, but the analyst we spoke to did have a few picks in this space:
* “Aflac (AFL) is our top pick. It’s a very solid, protection-focused company. You get a very reliable EPS stream that is not market sensitive, and from a credit perspective they do relatively well. I think I said before that no insurance company is perfect but their more risky exposure is concentrated exposure to bank and financial debt from Europe and Japan.”
* “My top pick is Assurant (AIZ). It’s a specialty insurance company as well. It’s got four or five niche oriented businesses, and no equity sensitivity in their earnings stream either. They’ve benefited in one of their businesses from the housing crisis. It doesn’t seem like anybody in the insurance business should benefit from a crisis, but their specialty property business has tripled in size in about three years owing
to higher mortgage delinquencies and default rates.”
* “Reinsurance Group of America (RGA). It’s a pure play life reinsurance company. It’s not quite as cheap as it was maybe a month or two ago when they raised some equity, but their equity raise was much more about a proactive opportunity to take advantage of some new business opportunities here as a bunch of the primary life insurers are looking for opportunities and ways to relieve capital strain, unlock capital.”
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