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Zacks Industry Outlook Highlights: PartnerRe, Allied World Assurance Company Holdings and Hilltop Holdings

CHICAGO, Jan. 16, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Insurance , including PartnerRe Ltd. (NYSE:PRE-Free Report), Allied World Assurance Company Holdings (NYSE:AWH-Free Report) and Hilltop Holdings Inc. (NYSE:HTH-Free Report).

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Industry: Insurance

Link: http://www.zacks.com/commentary/30854/

Market hardening has been the key to improvement for property-casualty insurers in the recent quarters. After struggling with falling prices for years, the industry seems to have finally reached better premium rates.

However, the carriers are still feeling the pressure on their investment portfolios due to the overall interest rate environment which is still low. Concerns related to weak capital levels are now things of the past though, as the industry's capital position has been building up on the back of improved earnings.

Along with continually improving pricing power, stronger preparation to withstand catastrophe-related losses should help insurers perform better in the upcoming quarters despite the pressure on investment income.

As property-casualty insurers hold about two-thirds of the invested assets in the form of bonds, their capacity is highly sensitive to changes in credit market conditions. With credit and equity markets turning around and long-term bond yields on the rise, insurers are likely to incur lesser realized and unrealized capital losses on their portfolio in the quarters ahead.   

Moreover, insurance volume is expected to expand going forward on speedier economic recovery. With improved employment in the private sector and recovery in the housing markets, a number of carriers have already started seeing growth in insurance sales.

The recent quarters have been witnessing a rebound in claims-paying capacity (as measured by policyholders' surpluses), which reflects the industry's resilience. Conservative investment strategies and capital restructuring efforts will continue to help property-casualty insurers improve their financial footing in the upcoming quarters.

The overall industry should be able to perform better over 2014 with increased support from both external and fundamental factors.

Proactive steps on transformational measures, including adoption of technology solutions, will give a competitive advantage. Also, in order to meet evolving consumer demands, insurers must innovate.

Currently, PartnerRe Ltd. (NYSE:PRE-Free Report), Allied World Assurance Company Holdings (NYSE:AWH-Free Report) and Hilltop Holdings Inc. (NYSE:HTH-Free Report) -- all with a Zacks Rank #1 (Strong Buy) -- are worth a look in the property-casualty space.

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