A recent analysts' report from Wall Street firm Lehman Brothers has endorsed XL Capital's stock, labelling it "strong buy".

"Our 'reinsurance play' continues to be XL Capital, as its revenues are principally generated from reinsurance products," the report stated.

It said a recent sell-off of XL's stock suggested that investors were overly concerned with the potential from single-claim losses from Petrobas and other high-profile losses.

"Investors, in our opinion, have ignored the more important underlying improvements in the reinsurance market and the unusual circumstance of the reinsurance cycle turning after the commercial cycle instead of before, as it has typically done in the past," the report continued.

The report said competition should remain heady in both the reinsurance and commercial insurance markets once modest price increases are reached.

"This appears to be a demonstration that while companies are being more disciplined, there remain too many companies with too much capital," the report said.

ACE was also mentioned in the report as a focus of Lehman's due to its solid reserves and conservative reporting of double-digit earnings growth.