Wednesday, Credit Suisse initiated coverage of Delphi Financial Group Inc. (DFG) stock with a Neutral rating and a price target of $22.
Analyst Zaremski noted that over the past year Delphi's stock price has been battered by concerns over its investment portfolio, specifically its high allocation to alternative investments, and by its relatively thin excess capital position.
While these concerns will remain on investors' minds as long as the debt market continues to trade at a sizeable discount to par, the analyst does not believe Delphi's credit impairments will result in rolling quarters of net losses.
More important, the analyst does not foresee a liquidity crunch, with the caveat being that DFG must remain prudent with its use of free cash flow in order to pay down its bank line of credit over the coming two years.
The analyst believes the company has recently shown this fiscal prudence by cutting its volatile alternative investment portfolio exposure in half and by being the first life insurer to raise equity capital in 2009.
The analyst's review of statutory reserves, Schedule H, leads him to believe that DFG has been among the most conservative underwriters, giving it cushion to absorb a potential near term pick-up in claims without posting reserve charges. Ultimately, the analyst believes that Delphi's $50 million capital raise was relatively small and that it will only mitigate a portion of the $200 million of credit losses he foresee through 2011.
Currently, DFG is down $0.04 or 0.16% and trading at $24.74.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.