Barclays on U.S. Insurance/Non-Life: ACGL and PRE Reserve Reviews Show Redundancies
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Up: 8 | Down: 5 | New: 26
Rating Summary:
11 Buy, 14 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on U.S. Insurance/Non-Life: ACGL and PRE Reserve Reviews Show Redundancies
Barclays analyst, Jay Gelb, said, "Arch Capital Group's (Nasdaq: ACGL) gross ultimate loss reserves are redundant by $86-$497 million (+2% to +9% of total reserves), while PartnerRe's (NYSE: PRE) gross ultimate loss reserves are redundant by $119-$608 million (+2% to +8% of total reserves), based on our
estimates. This analysis is based on ACGL and PRE's global loss reserve data as of year-end 2010. ACGL's reserve redundancy increased modestly from year-end 2009, while PRE's remained mostly unchanged."
"Based on the selected method, ACGL's reserves appear to be redundant by 5% as of YE 2010, versus 3% for YE 2009. Increased redundancies in other property lines accounted for most of the change year-over-year. We view ACGL as one of the best managed P&C franchises in Bermuda, with a balanced presence in both primary commercial insurance and reinsurance. ACGL shares are attractively valued, in our view, at 1.05x 2Q11 BV, below its historical average."
"PartnerRe's estimated reserve redundancy appears to be 5% as of YE 2010 based on the selected method. This redundancy is driven by PRE's non-U.S. casualty, non U.S. non-proportional motor and U.S. casualty businesses. PRE has a strong global reinsurance franchise, although recent results have been challenged by large catastrophe losses. PRE trades at 0.67 x BV, which is near its historical low, although in line with Bermuda reinsurance peers."
Barclays analyst, Jay Gelb, said, "Arch Capital Group's (Nasdaq: ACGL) gross ultimate loss reserves are redundant by $86-$497 million (+2% to +9% of total reserves), while PartnerRe's (NYSE: PRE) gross ultimate loss reserves are redundant by $119-$608 million (+2% to +8% of total reserves), based on our
estimates. This analysis is based on ACGL and PRE's global loss reserve data as of year-end 2010. ACGL's reserve redundancy increased modestly from year-end 2009, while PRE's remained mostly unchanged."
"Based on the selected method, ACGL's reserves appear to be redundant by 5% as of YE 2010, versus 3% for YE 2009. Increased redundancies in other property lines accounted for most of the change year-over-year. We view ACGL as one of the best managed P&C franchises in Bermuda, with a balanced presence in both primary commercial insurance and reinsurance. ACGL shares are attractively valued, in our view, at 1.05x 2Q11 BV, below its historical average."
"PartnerRe's estimated reserve redundancy appears to be 5% as of YE 2010 based on the selected method. This redundancy is driven by PRE's non-U.S. casualty, non U.S. non-proportional motor and U.S. casualty businesses. PRE has a strong global reinsurance franchise, although recent results have been challenged by large catastrophe losses. PRE trades at 0.67 x BV, which is near its historical low, although in line with Bermuda reinsurance peers."
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