Insurance Stocks: Blowout Season Still Leaves Room for Upside -- Barron's

Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

Sunny Skies for Insurers by Jim McTague

Highlighted companies: Aspen Insurance Holdings (AHL), Endurance Specialty Holdings Ltd. (ENH), Axis Capital Holdings Ltd. (AXS), Montpelier Re Holdings Ltd. (MRH), RenaissanceRe Holdings Ltd. (RNR), ACE Ltd. (ACE)
Summary: Many property and casualty insurers will likely see triple-digit earnings growth this year, after recovering from weather catastrophes that dropped profits in 2005. Shares have rebounded nicely, although more gains lie ahead, particularly for the industry's biggest players. Because the insurers lost so much in 2005, regulators let them hike rates sharply and increase deductibles. With a mild 2006 storm season behind them, some analysts feel shares are now fairly priced. But others say that even assuming an average rate of catastrophes, return on equity could increase 18-20% in 2007 due to the higher premiums, driving share prices up 25-30%. Assuming no major earthquakes, Rohan Pai and Alain Karaoglan of Deutsche Bank say earnings for the next three quarters should be excellent. They like Aspen Insurance Holdings (AHL), Endurance Specialty Holdings Ltd. (ENH), Axis Capital Holdings Ltd. (AXS), Montpelier Re Holdings Ltd. (MRH), and RenaissanceRe Holdings Ltd. (RNR). Even the less enthusiastic agree that bigger companies like ACE Ltd. (ACE) still have some upside.
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