SOURCE: Rothman Research

Rothman Research

April 09, 2010 08:37 ET

Survival Strategies for Insurance Companies

JOHANNESBURG, SOUTH AFRICA--(Marketwire - April 9, 2010) - www.rothmanresearch.com -- It is an apocalyptic world out there for property & casualty insurance players, with the rising number of natural catastrophes, the upcoming hurricanes season which has already been predicted as being a dangerously above-average season for the U.S. and not to mention regulatory pressure from both federal and state agencies. The industry seems to be in a shaky state after experiencing strings of claims coming from severely hit natural disaster areas, the latest in the list is ACE Limited (NYSE: ACE) with a probable $125 million lost sourcing from natural disasters, such as the Chilean and Haitian Quakes, in the first quarter. As Nature's wrath continue to spread growing fear of heavy losses in the industry, insurance companies have had to make fundamental changes in their business strategies by spreading risk through scaled and networked recovery schemes and many others have diversified their investment portfolio to minimize losses.

*Direct & free downloadable report on ACE Limited is available by signing up now at http://www.rothmanresearch.com/article/ace/23410/Apr-09-2010.html  

"Diversification if you are in the property/ casualty insurance business is close to irrelevancy if you have a huge majority of your revenue-stream in red-zone-natural-catastrophic regions... Take Cincinnati Financial Corp. (NASDAQ: CINF), for instance, its insurance writing revenues are spread in ten states most of which are in the Midwest regions," stated Jack Benassi of www.rothmanresearch.com. "We have another hurricanes season at our doorstep, and the forecasts are already dire... my opinion is to avoid property/ casualty stocks, but if these equities make the vast majority of your portfolio, start losing the riskiest ones and maybe hold those who have diversified wisely." 

*Complimentary downloadable research on Cincinnati Financial Corporation is accessible upon registration at http://www.rothmanresearch.com/article/cinf/23409/Apr-09-2010.html 

In the past months, the economic downturn has exerted constant pressure on pricing, with compact insured exposure as a result of a weakened economy and insureds' growing retention. Insurance companies can get ahead the pricing curve by preserving sturdy underwriting and efficiently managing coverage terms and conditions. 

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