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Here's Why Should Retain XL Group (XL) 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 13.69% compared with 2.0% increase by the industry.
XL Group remains focused on its insurance and reinsurance business lines that provide the best return on capital over the pricing cycle. The Zacks Rank #3 (Hold) insurer has been tapping opportunities in growing economies like Malaysia and Brazil. The insurer is also expanding its coverage to the upper and middle market businesses in North America. The company has also enhanced its builders' risk insurance capacity by four times to $1 billion.
XL Group’s inorganic growth story is impressive, the most noteworthy being the addition of Catlin Group in 2015. 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. XL Group estimates expense synergy target of a minimum of $300 million. The company expects a decline in integration costs in 2017, which raises optimism for margin expansion. For the second quarter, integration expenses are estimated between $30 million and $35 million.
The company’s shareholder-friendly approach makes it an attractive pick for yield-seeking investors. XL Group had shares worth $900 million remaining under its authorization. In 2017, the company expects to complete not less than $700 million in buy backs. The company also raised its dividend by 10% in Feb 2017 and its dividend yield betters the industry average.
Valuation remains attractive on a price to earnings as well as on a price to book basis. The P/E ratio is 12.9, a discount of 53.1% to the industry average. Also, price to book multiple of 0.9 is 35.7% lower than industry average of 1.4.
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 1.42. This is better than the industry average is 1.67. The expected long-term earnings growth is currently pegged at 9%.
Stocks to Consider
Some better-ranked stocks from the insurance industry are eHealth, Inc. (EHTH - Free Report) , American Financial Group, Inc. (AFG - Free Report) and ProAssurance Corporation (PRA - Free Report) .
eHealth provides private online health insurance services in the United States and China. The company posted a positive earnings surprise of 596.15% in the last reported quarter. The stock 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. The company posted a positive earnings surprise of 23.36% in the last reported quarter. The stock sports a Zacks Rank #1.
ProAssurance provides P&C insurance and reinsurance products in the United States. The company posted a positive earnings surprise of 12.72% in the last reported quarter. The stock carries a Zacks Rank #2.
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Here's Why Should Retain XL Group (XL) in Your Portfolio
Shares of XL Group plc have outperformed the Zacks categorized Property and Casualty Insurance industry, year to date. Shares gained 13.69% compared with 2.0% increase by the industry.
XL Group remains focused on its insurance and reinsurance business lines that provide the best return on capital over the pricing cycle. The Zacks Rank #3 (Hold) insurer has been tapping opportunities in growing economies like Malaysia and Brazil. The insurer is also expanding its coverage to the upper and middle market businesses in North America. The company has also enhanced its builders' risk insurance capacity by four times to $1 billion.
XL Group’s inorganic growth story is impressive, the most noteworthy being the addition of Catlin Group in 2015. 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. XL Group estimates expense synergy target of a minimum of $300 million. The company expects a decline in integration costs in 2017, which raises optimism for margin expansion. For the second quarter, integration expenses are estimated between $30 million and $35 million.
The company’s shareholder-friendly approach makes it an attractive pick for yield-seeking investors. XL Group had shares worth $900 million remaining under its authorization. In 2017, the company expects to complete not less than $700 million in buy backs. The company also raised its dividend by 10% in Feb 2017 and its dividend yield betters the industry average.
Valuation remains attractive on a price to earnings as well as on a price to book basis. The P/E ratio is 12.9, a discount of 53.1% to the industry average. Also, price to book multiple of 0.9 is 35.7% lower than industry average of 1.4.
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 1.42. This is better than the industry average is 1.67. The expected long-term earnings growth is currently pegged at 9%.
Stocks to Consider
Some better-ranked stocks from the insurance industry are eHealth, Inc. (EHTH - Free Report) , American Financial Group, Inc. (AFG - Free Report) and ProAssurance Corporation (PRA - Free Report) .
eHealth provides private online health insurance services in the United States and China. The company posted a positive earnings surprise of 596.15% in the last reported quarter. The stock 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. The company posted a positive earnings surprise of 23.36% in the last reported quarter. The stock sports a Zacks Rank #1.
ProAssurance provides P&C insurance and reinsurance products in the United States. The company posted a positive earnings surprise of 12.72% in the last reported quarter. The stock carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>