Market Overview

Credit Suisse Sees Opportunity In 'Soft' P&C Insurance Space

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In a new report, analysts at Credit Suisse took an in-depth look at the property and casualty (P&C) insurance business and initiated coverage on several names in the space.

Here's a breakdown of what they had to say.

Soft Market

Analysts believe low interest rates will limit the decline in casualty pricing. Credit Suisse is forecasting 9 to 10 percent average book value growth during 2015 and 2016, slightly lower than the 11 percent rate of growth in the past five years.

Analysts also predict average return on equity of 12 percent for the group in the next two years.

Defensive, Value-Driven Trading

While analysts see few business-related catalysts on the horizon to boost share prices in the near-term, they believe that several names in the space offer buying opportunities on other grounds. Analysts predict that excess capital on the balance sheets of many P&C insurers will continue to be returned to shareholders.

Related Link: Patriot National Acquires Trigen Insurance Solutions

According to the report, maintenance of current capital return levels (70 to 130 percent of operating earnings) will continue to be a "key value driver" for stocks.

Stock Picks

Credit Suisse assigned an Outperform rating on the following stocks:

  • Allstate Corp (NYSE: ALL)
  • Chubb Corp (NYSE: CB)
  • XL Group plc (NYSE: XL)
  • ACE Limited (NYSE: ACE)
  • Arthur J. Gallagher & Co. (NYSE: AJG)
  • Marsh & McLennan Companies, Inc. (NYSE: MMC)

Credit Suisse issued Neutral ratings on these names:

  • Travelers Companies Inc (NYSE: TRV)
  • Arch Capital Group Ltd. (NASDAQ: ACGL)
  • Progressive Corp (NYSE: PGR)
  • Willis Group Holdings PLC (NYSE: WSH)

Credit Suisse initiated the following two names at Underperform:

  • Aon Plc (NYSE: AON)
  • W.R. Berkley Corp (NYSE: WRB)

Latest Ratings for AJG

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsEqual-Weight
Nov 2020Credit SuisseMaintainsOutperform
Nov 2020Piper SandlerUpgradesNeutralOverweight

View More Analyst Ratings for AJG
View the Latest Analyst Ratings

 

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