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Why You Should Retain XL Group (XL) Stock in Your Portfolio
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Shares of XL Group plc have outperformed the Zacks categorized Property and Casualty Insurance industry, year to date. Shares gained 7.62% compared to a 3.50% increase recorded by the industry.
XL Group remains focused on tapping opportunities in growing economies like Malaysia and Brazil. The insurer is expanding its coverage to the upper and middle market businesses in North America. To offer construction firms in North America a one-carrier property insurance solution on high-value commercial real estate projects, the insurer enhanced its builders' risk insurance capacity by four times to $1 billion.
This apart, the company’s inorganic growth story is impressive. The Catlin Group acquisition in 2015 was the company’s most notable inorganic growth initiative in recent times. The deal has been helping the company increase alternative capital opportunities, significantly improve its business in the Lloyd's platform, and expand quite a few lines of its business where it has lately made investments. These, in turn, have been boosting the insurer’s topline.
XL Group believes that the Catlin acquisition will also help it to achieve its expense synergy target of at least $300 million. Adding to the optimism, the company estimates a decline in integration costs as well as operating expense in 2017. XL Group remains focused on its insurance and reinsurance business lines that provide the best return on capital over the pricing cycle. To refine its business mix, XL Group is deploying capital in businesses with lower loss ratios. Together, these initiatives should help to expand margin.
XL Group deploys its capital prudently for strategic buyouts, organic growth initiatives and shareholder-friendly moves. The insurer expects to buy back at least $700 million worth shares in 2017, further bolstering the bottom line. Also, the company’s dividend yield of 2.20% is better than the sector average of 2.37%. This makes the stock an attractive pick.
The stock is also presently undervalued on a price to book basis as well as on a price to earnings basis. The P/B ratio is 8.3, a discount of 41% to the industry average. The P/E ratio is 11.9, a discount of 55.1% to the industry average.
Also, the price earnings growth ratio, which determines the relative trade-off among the price of a stock, the earnings generated per share, and the company's expected growth, is 1.35. The industry average is 1.87.
American Financial Group engages primarily in property and casualty (P&C) insurance with focus on specialized commercial products for businesses. Shares of the company gained 6.66% year to date.
Selective Insurance provides insurance products and services in the U.S. Its shares rallied 9.41% year to date.
Progressive offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. Shares of the company gained 12.14% year to date.
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Why You Should Retain XL Group (XL) Stock in Your Portfolio
Shares of XL Group plc have outperformed the Zacks categorized Property and Casualty Insurance industry, year to date. Shares gained 7.62% compared to a 3.50% increase recorded by the industry.
XL Group remains focused on tapping opportunities in growing economies like Malaysia and Brazil. The insurer is expanding its coverage to the upper and middle market businesses in North America. To offer construction firms in North America a one-carrier property insurance solution on high-value commercial real estate projects, the insurer enhanced its builders' risk insurance capacity by four times to $1 billion.
This apart, the company’s inorganic growth story is impressive. The Catlin Group acquisition in 2015 was the company’s most notable inorganic growth initiative in recent times. The deal has been helping the company increase alternative capital opportunities, significantly improve its business in the Lloyd's platform, and expand quite a few lines of its business where it has lately made investments. These, in turn, have been boosting the insurer’s topline.
XL Group believes that the Catlin acquisition will also help it to achieve its expense synergy target of at least $300 million. Adding to the optimism, the company estimates a decline in integration costs as well as operating expense in 2017. XL Group remains focused on its insurance and reinsurance business lines that provide the best return on capital over the pricing cycle. To refine its business mix, XL Group is deploying capital in businesses with lower loss ratios. Together, these initiatives should help to expand margin.
XL Group deploys its capital prudently for strategic buyouts, organic growth initiatives and shareholder-friendly moves. The insurer expects to buy back at least $700 million worth shares in 2017, further bolstering the bottom line. Also, the company’s dividend yield of 2.20% is better than the sector average of 2.37%. This makes the stock an attractive pick.
The stock is also presently undervalued on a price to book basis as well as on a price to earnings basis. The P/B ratio is 8.3, a discount of 41% to the industry average. The P/E ratio is 11.9, a discount of 55.1% to the industry average.
Also, the price earnings growth ratio, which determines the relative trade-off among the price of a stock, the earnings generated per share, and the company's expected growth, is 1.35. The industry average is 1.87.
XL Group carries Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the finance sector are American Financial Group, Inc. (AFG - Free Report) , Selective Insurance Group, Inc. (SIGI - Free Report) and The Progressive Corporation (PGR - Free Report) . Each of these stocks flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial Group engages primarily in property and casualty (P&C) insurance with focus on specialized commercial products for businesses. Shares of the company gained 6.66% year to date.
Selective Insurance provides insurance products and services in the U.S. Its shares rallied 9.41% year to date.
Progressive offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. Shares of the company gained 12.14% year to date.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>