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Bear of the Day

Montpelier Re Holdings (MRH) reported operating loss, less than the Zacks Consensus Estimate loss but wider than the year-ago loss. The quarter suffered largely due to huge catastrophe losses coupled with significant increase in expense as well as lower investment income.

The current pricing environment in the primary insurance market and the stressed economy is expected to restrict top-line growth. Additionally, there exists execution risk with the newer platforms and we expect investment yields to remain under pressure in the near term.

Our six-month target price is $17.00. This price target along with the annual dividend of $0.40 implies an expected total return of negative 5.8% over that period.

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