On Aug 9, 2013, Zacks Investment Research upgraded Global Indemnity Plc (GBLI) to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
Global Indemnity has been experiencing rising earnings estimates on the back of improved second-quarter 2013 results. Moreover, strong performance in Wind River Re, stable reserves and a healthy capital position have been impressive. Additionally, this property-casualty insurer delivered positive earnings surprises in all of the last 4 quarters with an average beat of 65.1%.
On Aug 6, Global Indemnity reported second-quarter 2013 operating earnings per share of 27 cents, which topped the Zacks Consensus Estimate of 22 cents. However, it fell short of the year-ago quarter earnings of 29 cents a share.
Total revenue growth of 0.9% over the prior-quarter was driven by higher premiums, backed by higher rates. This was partially offset by reduced net investment income. While loss and loss adjusted expenses declined, underwriting and operating expenses witnessed growth. Overall, combined ratio improved to 101.2% from 103.6% in the year-ago period.
Global Indemnity is gaining traction in both specialty insurance in the U.S. and reinsurance operations in Bermuda. Although low interest rate environment undermines the investment portfolio, a diversified business mix and strong capitalization also scores well with the ratings agencies, reflecting a strong long-term growth potential.
Based on Global Indemnity’s fundamental strength and capital management, the Zacks Consensus Estimate for 2013 jumped 5.5% to $1.15 per share in the last 7 days. Nonetheless, the estimate for 2014 remained static at $1.20 in the last 7 days. Meanwhile, no downward revision in estimates was witnessed for both the years.
Other Stocks to Consider
Apart from Global Indemnity, other outperforming insurers in the industry include HCI Group Inc. (HCI - Snapshot Report), EMC Insurance Group Inc. (EMCI - Snapshot Report) and Everest Re Ltd. (RE - Analyst Report). All the stocks carry a Zacks Rank #1 (Strong Buy).