Morgan Stanley Leaves Thesis On XL Group plc Unchanged After News That Reinsurance Chief Will Retire

In a report published Thursday, Morgan Stanley analyst Kai Pan reiterated an Overweight rating on

and maintained the $39.00 price target. XL Group PLC is currently on Morgan Stanley's Best Idea list. In the report, Morgan Stanley noted, “Our Overweight thesis remains unchanged. We believe XL has a clear path to a double digit ROE. The key drivers are: (1) improving Insurance (70% of company premiums) underwriting combined ratio to low 90s;and (2) repurchasing $2.6b shares in 2014-16e.This road map does not depend on improving Reinsurance underwriting results. In fact, given the challenging reinsurance market conditions, we have factored in 370bps core margin deterioration in this segment in 2014-16e. Mr. Veghte's departure does not alter our confidence in XL's ability to execute on the road map to 10%+ ROE. Our price target of $39 (1x 3Q15e BVPS) offers +17% upside with compelling bull to bear skew of 2.5 to 1.” XL Group PLC closed on Wednesday at $33.20.