Analyst Sees Buying Opportunity For Reinsurers

MARK JEWELL

BOSTON (AP) — A Barclays Capital analyst on Wednesday said he sees a short-term buying opportunity in stocks of property-casualty reinsurers, which tend to outperform the broader market during the typical peak of hurricane season in September.

Analyst Jay Gelb also noted that forecasters expect a below-average Atlantic hurricane season this year.

Gelb said he believes "investors should buy a basket of P&C reinsurance stocks in September as the stocks historically outperform" once hurricane season peaks.

Gelb said that over the last seven years, an index of property-casualty reinsurers with exposure to catastrophes has outperformed the Standard & Poor's 500 index by an average of more than 5 percent during September. While those stocks have returned an average 3 percent in September during those seven years, the S&P has averaged a loss of more than 2 percent.

However, Gelb said that 2005 — when hurricanes Katrina and Rita caused widespread damage and triggered losses for reinsurers — was "a notable exception."

Government forecasters have said this year's hurricane season is likely to be less active than previously predicted because of the occurrence of a warmer weather pattern called an El Nino over the Pacific Ocean. That pattern has lately been acting as a damper to tropical storms in the Caribbean and neighboring Atlantic. However, the forecasters warned people to remain vigilant because the peak period for hurricanes runs from August through October, while the overall season lasts from June through November.