On January 13, Carnival cruise ship the Costa Concordia hit a reef off the west coast of Italy causing the deaths of at least six people, meaning its probably time to take a closer look at cruise ship stocks Carnival Corporation (NYSE: CCL) and Royal Caribbean Cruises (NYSE: RCL) along with NYSE listed insurance stock XL Group plc (NYSE: XL). Already, the impact of the disaster is sinking Carnival Corporation’s stock while insurance stocks or reinsurers like Assicurazioni Generali SpA (BIT: G), RSA Insurance Group plc (LON:RSA), Hannover Rueckversicherung AG (ETR: HNR1) and XL Group plc may be forced to pay out between $600 million and $800 million or more. however and perhaps on a bright note for insurers, Carnival’s sheer size means that its probably the most widely underwritten account in the marine insurance market – meaning the exposure will be spread out among most of the London insurance stocks. nevertheless, should you go for a cruise on cruise ship stocks Carnival Corporation (CCL) and Royal Caribbean Cruises (RCL) or insurance stock XL Group plc (XL)? here is a closer look to help you decide on an investment or trading strategy:

Carnival Corporation (NYSE: CCL)

Carnival Corporation operates 101 ships with brands that include P&O, Cunard and Princess Cruises and accounts for close to half of the global cruise market. Specifically, Costa Concordia’s 3,200 berths represents about 1.5% of total capacity. On Friday, Carnival Corporation fell 2.45% on the NYSE to $34.28 (CCL has a 52 week trading range of $28.52 to $48.13 a share) for a market cap of $26.64 billion while London listed Carnival plc (LON: CCL) plunged about 17% on Monday. Carnival Corporation has already said that the accident will cost it $85 million to $95 million as the ship was insured for damage with a deductible of approximately $30 million. however, the real damage is hard to ascertain right now as this time of the year is important in the booking cycle for the cruise ship industry as bookings for the European summer holiday season in several months are usually booked now. Already, demand is being hit by the recession descending upon Europe along with political tensions in both the Middle East and North Africa keeping oil prices elevated.

Royal Caribbean Cruises (NYSE: RCL)

Royal Caribbean Cruises operated 40 ships at the start of 2011 under several brands that include Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. in addition, Royal Caribbean Cruises’ Pullmantur brand serves the cruise markets in Spain, Portugal and Latin America; its CDF Croisieres de France brand serves the French market; and the company has a 50% investment in a joint venture operating TUI Cruises serving the German market. On Friday, Royal Caribbean Cruises fell 2.61% to $28.75 (RCL has a 52 week trading range of $18.70 to $49.99 a share) for a market cap of $6.25 billion and it will no doubt enter choppy waters when trading resumes on Tuesday. Investors should note that back in October, Royal Caribbean Cruises announced that fiscal 2011 earnings would be lower due to the strengthening of the US Dollar along with a fuel option revaluation loss. of course, a strong dollar or a Euro collapse would encourage more North Americans and Asians to visit Europe BUT after the Costa Concordia disaster, they may not want to take cruises there for awhile. likewise, Royal Caribbean Cruises will undoubtedly and perhaps unfairly be impacted by travelers opting not to book cruises right now but prior to the disaster, RCL’s outlook for 2012 bookings was “strong.” hence, I suspect that Royal Caribbean Cruises will get hit by headwinds this year but that might also make for some good buying opportunities.

XL Group plc (NYSE: XL)

XL Group plc is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis. On Friday, fell 1.51% to $20.26 (XL has a 52 week trading range of $17.69 to $25.43 a share) for a market cap of $6.49 billion. XL Group plc is said to have exposure to the Costa Concordia disaster but the company has so far declined to publically comment on just what that exposure is. nevertheless, XL Group plc is reported to be the lead underwriter for the ship at Lloyd’s of London – meaning it will have some exposure. Moreover, it was reported at the end of last week that XL Group plc is expected to end the fourth quarter of 2011 with estimated losses of $135 million to $185 million as the Thai floods swept away any hopes of a profit. in other words, right now might not be the best time to be in the insurance business in general.

The Bottom Line. the Costa Concordia disaster will certainly create some turbulent waters for Carnival Corporation (CCL), Royal Caribbean Cruises (RCL) and XL Group plc (XL) but these stocks are far from being sunk.

<a href="http://www.smallcapnetwork.com/Will-the-Costa-Concordia-Disaster-Sink-Insurance-and-Cruise-Ship-Stocks-CCL-RCL-XL/s/via/3414/article/view/p/mid/1/id/453/tag:news.google.com,2005:cluster=http://www.smallcapnetwork.com/Will-the-Costa-Concordia-Disaster-Sink-Insurance-and-Cruise-Ship-Stocks-CCL-RCL-XL/s/via/3414/article/view/p/mid/1/id/453/Tue, 17 Jan 2012 04:40:31 GMT”>Will the Costa Concordia Disaster Sink Insurance and Cruise Ship Stocks? CCL, RCL & XL

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Tags: assicurazioni generali, assicurazioni generali spa, costa concordia, group plc, insurance stocks

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