XL Group is a global insurance and reinsurance company engaged in providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises.
Although analysts question the strategic rationale of XL's Catlin deal, given the competitive and structural headwinds in both property/cat reinsurance market and Lloyd's market, they are more optimistic from a financial perspective, with cost saves likely to come in above management's state target and new efficiencies from the combined reinsurance program.
XL Group entered in into an agreement in January to acquire Catlin Group to form a combined business which is expected to have a leading presence in the global specialty insurance and reinsurance markets.
Credit Suisse expects over $300 million of costs saves from the Catlin deal, exceeding stated targets of $200 million.
"We think that the larger capital base with a more diverse business mix will allow the combined entity to utilize reinsurance more efficiently," the firm noted.
While the Catlin deal interfered with a year's worth of share repo, analysts think that XL Group can begin buying back stock again as early as the second half of 2015, and that it will buy back $300 million shares in 2016 and 2017.
The firm expects earnings of $3.28 and $3.62 per share for fiscal years 2015 and 2016, respectively.
Separately, TheStreet Ratings team rates XL GROUP PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate XL GROUP PLC (XL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
You can view the full analysis from the report here: XL Ratings Report