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Stock Strategist Industry Reports

Reinsurance Companies on the Radar

Despite difficulties from storms and investments, these firms have some value.

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Reinsurance firms have not been immune to the deteriorating investments that laid waste to much of the financial sector this year. But taking a step back, a broad look at the reinsurance industry reinforces a valuable lesson. There are a wide variety of reinsurers out there, and some of them have stood up much better than others.

Reinsurers have been exposed to the viruses that spread among financial services firms for a simple reason. Like banks, they take money in from a wide variety of sources, and then invest the money. Bank customers put money in a bank for safekeeping, and reinsurer customers also send money to reinsurers for safekeeping--with some key differences.

Bill Bergman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.