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The Zacks Analyst Blog Highlights: First American Financial, Hanover Insurance Group, Atlas Financial and Greenlight Capital Re

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For Immediate Release

Chicago, IL – September 13, 2017 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeFirst American Financial Corp (NYSE: (FAF - Free Report) – Free Report), Hanover Insurance Group Inc (NYSE: (THG - Free Report) – Free Report), Atlas Financial Holdings Inc (Nasdaq: (AFH - Free Report) – Free Report) and Greenlight Capital Re, Ltd. (Nasdaq: (GLRE - Free Report) – Free Report).

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Here are highlights from Tuesday’s Analyst Blog:      

4 Top Insurance Companies to Buy as Irma Loses Steam

Speculations of massive destruction by Hurricane Irma had rattled the insurance industry. The storm's impact on Florida, however, was not as devastating as expected as it has been downgraded to Category 1. Storm surges were also of a lesser magnitude than the National Hurricane Center’s initial projections.

As Irma inflicted lesser damage than feared, insurance stocks bounced back and were among the biggest gainers on the bourses. Morgan Stanley said that the insurance industry “has strong balance sheet to weather the financial impact” of the storm and has historically performed well after such nerve-wrecking events.

Needless to say, the insurance industry is already boosting business operations, implementing new technologies and investing in cybersecurity to drive growth. Thus, investing in sound insurance stocks seems prudent at the moment.

Insurance Stocks: The Biggest Gainers

Insurance stocks had been losing ground for weeks as the hurricanes dampened investors’ sentiments. Rating agency Moody’s cautioned that property and casualty insurers, reinsurers as well as alternative capital providers like the buyers of catastrophe bonds, were all likely to undergo “substantial losses” owing to the hurricanes, particularly Irma. And why not? Irma was expected to be the most powerful hurricane and had already wrecked roads and telecommunications systems in the French Caribbean island territories. The lesser damage has been a blessing in disguise for insurance stocks.

Exchange traded fund that tracks the insurance sector also moved north. The SPDR S&P Insurance ETF (KIE) and the iShares Dow Jones US Insurance Index ETF (IAK) increased 2.2% and nearly 2%, respectively. In fact, the PowerShares KBW Property & Casualty Insurance Portfolio advanced 3.1%, its highest one-day climb since July 2015. This gain helped the fund close in the positive territory for the year.

Irma Fears Dodged

Insurers breathed a sigh of relief after Irma changed its direction in the eleventh-hour and eased worries about widespread destruction in the Sunshine State. Residents of Florida had fled to safety as the hurricane was anticipated to hit with record-breaking winds of 185 miles an hour. The 400-mile-wide hurricane was devastating enough to affect the entire state (read more: Hurricane Irma Set to Hit Florida: Gainers & Losers).

Irma, however, gradually lost strength once it made landfall on the Florida Keys on Sep 10. The eye of the storm missed Miami and lost steam once it crossed the mostly uninhabited Everglades. Following this, Irma was downgraded to a tropical storm. Chief investment officer of Atlantic Trust, David Donabedian said that “it was a relief rally”, while AIR Worldwide, a catastrophe modeling software firm added that expected losses stemming from Irma is between $20 billion and $40 billion, way below their initial forecast of $20-$65 billion.

New Technologies & Business Models Bode Well for Insurers

Majority of U.S. insurance company CEOs that participated in the KPMG U.S. CEO Outlook 2017 are confident about the prospects of their firms in the next three years. They believe that innovative processes and implementation of new technologies in response to various disruptions will bode well for the industry.

The insurance industry is optimizing the use of data analytics and predictive technologies, building data collection capabilities and uplifting the skill of the current workforce. At the same time, many insurance companies are investing in cybersecurity to find new revenue streams and innovate. Matt McCorry, Insurance Advisory Leader, KPMG LLP believes that “as insurers embark on a digital journey, cybersecurity is becoming increasingly more important to secure ongoing operations.”

4 Must-Buy Insurance Stocks to Boost Your Portfolio

Given such positive trends, investing in fundamentally solid insurance stocks seems judicious. To help you with this, we have selected four insurance stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

First American Financial Corp (NYSE: FAFFree Report) is engaged in the business of providing financial services. Its specialty insurance segment issues property and casualty insurance policies. First American Financial has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose 9.2% over the last 60 days. The company’s estimated growth rate for the current quarter is 4.2%.

Hanover Insurance Group Inc(NYSE: THGFree Report) is engaged in providing property and casualty insurance products and services. It markets its domestic products and services through independent agents and brokers in the United States, and conducts business internationally through a subsidiary. Hanover Insurance has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings rose almost 6% over the last 60 days. The company’s estimated growth rate for the next quarter is 541.3%.

Atlas Financial Holdings Inc(Nasdaq: AFHFree Report) is engaged in the business of providing commercial automobile insurance in the United States, with a niche market orientation. The coverages provide for the payment of damages to an insured automobile arising from any kinds of risks, including natural calamities. Atlas Financial has a Zacks Rank #1 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings advanced 4.5% over the last 60 days. The company’s estimated growth rate for the next quarter is 114.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greenlight Capital Re, Ltd.(Nasdaq: GLREFree Report) is engaged in the writing property and casualty reinsurance business. It invests in the public equity and fixed income markets of the United States. Greenlight Capital has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings soared 114.2% over the last 60 days. The company’s estimated growth rate for the current quarter is 12.5%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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