The reinsurer business is an interesting one. Investors buying the equities are betting that major disasters will not happen, or at least not happen at a great enough scale to cost the business too much money. As we head into storm season, now is an important time to look at the business and how it will perform in the months ahead.

Euro Reinsurer

In a report on the reinsurer business in Europe entitled “The Calm Before The Storm,” Citigroup Inc. (NYSE:C) analysts think that though reinsurers look quite strong in the medium term, investors should be cautious about the industry in the longer run. Things are good right now, but there’s a great deal of risk in the industry.

Euro Reinsurer: Medium Term On Pricing

One of the key themes for the reinsurer industry in Europe include what the analysts sees as reasonable pricing in the medium term, despite most analysts seeing compressed margins through the rest of 2013, the Citigroup Inc. (NYSE:C) analysts disagree, putting forward the idea that reinsurers in Europe will do alright in the medium term on pricing.

A key driver of the growth in industry numbers is bound to be capital management, according to the report. Capital markers, say Citigroup Inc (NYSE:C), could “again emerge as a positive catalyst.” The increasing amount of alternative investments right now and swelling on low interest rates is likely to remain a short term problem, as that market isn’t mature and may not be stable at its current size.

The top pick in the European reinsurer field according to this report is Score SE (EPA:SCR), a reinsurer based in France. The firm has shown better earnings growth than others in the market, and has not had a particularly strong year so far, meaning it might have room to grow.

So far in 2013, Score SE (EPA:SCR) stock has risen by less than 9 percent, lagging wider indices. Citigroup Inc (NYSE:C) think the French firm should gain on news of a new strategic plan toward the end of the year, the relaxation of pressure from M&A rumors, which Citigroup think is overblown, and the highest regular yield in the sector.

European reinsurers are doing well right now, and they’re likely to be able to continue that trend for the rest of the year, according to this report. Past that, however, things look a little rough for the industry.