Expectations Seem Low For Swiss Re, But Not Without Cause

Swiss Re (OTCPK:SSREY), the second-largest reinsurance company in the world, has not had a very good run. Not only have the shares lagged the S&P 500 over the last one-, two-, five-, and ten-year periods, but also many of those performances compare poorly to sector peers/rivals like Munich Re (OTCPK:MURGY), Hannover Re (OTCPK:HVRRY), SCOR (OTCPK:SCRYY), and smaller players like Everest Re (NYSE:RE). Comparatively weaker ROEs do explain at least some of the underperformance, but the more important question is whether Swiss Re looks placed to do better in the coming years.

Swiss Re should be poised to benefit from rate improvements, but it remains to be seen whether management can achieve the necessary margin improvements in its casualty reinsurance and primary insurance operations. Modest expectations are an advantage in that respect, as only modest improvements in long-term ROEs can drive mid-single-digit income growth and double-digit annual shareholder returns.

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Expectations Seem Low For Swiss Re, But Not Without Cause

Investopedia: Tempest-Tossed Berkley

Storms both real and figurative have been buffeting the insurance industry for some time now. Loose underwriting standards and a drive for market share have kept a lid on premium price increases, storms and natural disasters have been whacking the loss ratios and a low interest rate environment - combined with default worries at national and local levels - has hampered investment income. 

In times like these, W.R. Berkley (NYSE:WRB) is a relatively safe harbor.

A Mix of News For Q2
In one very big respect, the second quarter was a bad one, but in many other ways it was a confirmation of real progress. Operating income was down about one-third from last year and that's the big negative take-away for investors.



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http://stocks.investopedia.com/stock-analysis/2011/Tempest-Tossed-Berkley-WRB-ALL-ACGL-BRK.A-PGR-XL0729.aspx

Investopedia: The Japanese Earthquake's Effects On Insurers

Although it is still far too early to fully assess the scale and impact of the severe earthquake that struck northeastern Japan, and all of us at Investopedia wish our friends and readers in Japan the best, the fact remains that markets have to digest this information and move forward. To that end, it seems quite likely that major reinsurance companies are going to face large claims in the wake of this disaster. 

The Scale of the Disaster 

As of this writing, which is only hours after the quake struck, it is all but impossible to get a firm sense of the damage in the Tohoku region of Japan. While the reported magnitude of this quake is considerably higher than that of Great Hanshin quake that struck Kobe in 1995, it does not automatically follow that this quake will surpass the fatality (over 6,000 dead) or economic damage (roughly $100 billion) of that prior disaster. Let us all hope it does not.

Nevertheless, there are many major manufacturing facilities in this region owned by companies like Sony (NYSE:SNE), Toyota (NYSE:TM),and Nissan (Nasdaq:NSANY) to name a few. What's more, given the reports of infrastructure damage that have already come in (roads, bridges, and the like), it seems probable that there has been significant economic damage.

Please read the full piece at Investopedia:
http://stocks.investopedia.com/stock-analysis/2011/The-Japanese-Earthquakes-Effects-On-Insurers-BRK.A-RNR-SWCEY-ACGL-ACE-XL-RE0311.aspx